Correction on "restricted stock" (from Hacker News)

[jlevy]

Correction on "restricted stock" (from Hacker News)

[jlevy]

The error about the meaning of "restricted" should now be fixed: https://github.com/jlevy/og-equity-compensation#equity-compensation-details

[mrmcd]

In this contect, “restricted” refers to the fact that the stock will be subject to repurchase at the lower of fair market value or cost, which repurchase right lapses over the service-based vesting period.

This sentence might be technically correct but seems confusing. Usually RSA's you don't pay anything for, unlike options, the shares are just given to you as compensation, but with a vesting schedule where you have to give the unvested shares back if you leave. Repurchase makes it sound like you would receive something for the unvested shares. I guess if you paid for the RSA shares sure, but I don't know how common that is?

[mrmcd]

Also, this might be better under a different ticket, but come clarification on the difference between RSA's and RSU's might be helpful.

RSA (restricted stock award) the shares are actually actually issued to you but with a contractual restriction on them. This means that you get dividends and voting rights while the shares are vesting, and it's eligible for an 83(b) election.

RSA (restricted stockunit) the shares aren't issued until the vesting date, meaning you don't get voting rights, dividends, 83b, etc.

see: http://www.extendedarticle.com/Newsletters/PCI/2012/PCIam12/PCIam121.html

For most startups employees the meaningful difference is minor (aside from the 83b) but I've seen both terms used in the guide.