Employee restricted stock is distinguished from ordinary (SEC Rule 144) restricted stock in that it is typically issued to executives subject to certain vesting schedules and, as a result, is subject to forfeiture. As such, it would be more proper to call it non-vested stock.

While such shares are illiquid during the employee's service period, a discount for illiquidity should not be taken, since what the employee gets after vesting is what counts. If the stock is still illiquid after vesting -- whether because of regulatory or contractual issues -- a discount should be taken.

For more information on our valuations of employee restricted stock, contact Pluris today.