How Do Restricted Stock Options Work - Restricted Stock As a Compensation Tool

Like options, restricted stock poses some significant concentration problems with client portfolios

. In addition to having human labor capital tied up with their employer, share grants offer even greater exposure to the company fortunes. Many employers have no practical access to hedging tools or are proscribed from doing so by their employers. In extreme cases, it may be useful to underweight the market sector of the employer in the balance of the plan participant's portfolio. In most cases, it makes sense to sell the employer stock as soon as it vests. The best places for the proceeds are diversified equity or bond funds. Once taxes can no longer be deferred, portfolio diversification becomes a paramount concern. How Do Restricted Stock Options Work

How Do Restricted Stock Options Work - Restricted Stock As a Compensation Tool

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