TLDR:
Restricted stock is company stock granted to employees or executives that is subject to vesting conditions and trading restrictions, typically forfeited if the employee leaves before vesting is complete.
Restricted Stock vs. RSU — Key Differences
While both restricted stock and restricted stock units (RSUs) are equity compensation tools subject to vesting, they differ in important ways. Restricted stock is actual stock ownership from the grant date, with voting rights and the ability to file an 83(b) election to start the capital gains holding period. RSUs are a contractual promise to deliver stock upon vesting — the recipient doesn’t own shares or have voting rights until vesting occurs, and there is no 83(b) election available. RSUs are simpler to administer and don’t require the employee to make any purchase, making them popular at larger companies.