What about nonvested and restricted shares?
Statement 123(R) differentiates between nonvested shares and restricted shares. Nonvested shares, as defined in Statement 123(R), are shares granted to an employee that contain only a risk of forfeiture (i.e., the employee must hold the shares until he satisfies the service or performance conditions and is unable to sell them during that period. If the employee fails to satisfy the service or performance conditions [forfeits the award], the shares are returned to the company). The fair value of nonvested shares is the quoted market price of the shares. In Statement 123(R) terminology, restricted shares are shares that will be restricted from resale even after an employee has a vested right to them (e.g., a requirement to hold the shares for five years after vesting). The fair value of restricted shares is less than the quoted market price of unrestricted shares. Fair value should reflect the amount at which a similarly restricted share would be sold to an independent party. The restriction of the shares after vesting effectively reduces the fair value associated with those shares.
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