Performance Based Restricted Stock Law and Legal Definition

Performance based restricted stock is a restricted share of stock given to an executive that is dependent upon the reaching internal or external performance goals or an increase in the price of the company stock. It is a form of pay-for-performance compensation.

Such stock is in contrast to restricted stock, which is restricted in that it can't be sold unless the employee remains at the company for a stated period, costing a recipient little or nothing and generally isn't tied to future performance. Even if the company's stock price sinks before the shares are fully vested, the individual profits from selling the shares.