Define: Deferred Stock

Business, Legal & Accounting Glossary

Definition: Deferred Stock



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Full Definition of Deferred Stock


Deferred stock is one or more shares of stock that does not pay dividends until a specified date or event occurs, such as a company reaching certain profitability levels. Deferred stock is typically held in a lock deferred stock compensation account until the expiration date. Shareholders of deferred stock do not have any rights to the assets of a bankrupt corporation until all preferred and common stockholders have been paid. Usually, deferred stock is issued to company founders and certain members of management to restrict their access to dividends until dividends have been distributed to all other shareholders. Deferred stock is, therefore, subordinate to all other classes of stock. Today, deferred stock is not a common practice as the deferred stock payouts can be considerable despite the postponement in distribution. Holders of deferred stock are usually granted voting rights only after the expiration date has passed. Many corporations allow the owner of the deferred stock to elect a date for distribution of deferred stock shares, subject to certain parameters set forth by the governing board.


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https://payrollheaven.com/define/deferred-stock/
Modern Language Association (MLA):
Deferred Stock. PayrollHeaven.com. Payroll & Accounting Heaven Ltd. April 07, 2020 https://payrollheaven.com/define/deferred-stock/.
Chicago Manual of Style (CMS):
Deferred Stock. PayrollHeaven.com. Payroll & Accounting Heaven Ltd. https://payrollheaven.com/define/deferred-stock/ (accessed: April 07, 2020).
American Psychological Association (APA):
Deferred Stock. PayrollHeaven.com. Retrieved April 07, 2020, from PayrollHeaven.com website: https://payrollheaven.com/define/deferred-stock/

Definition Sources


Definitions for Deferred Stock are sourced/syndicated and enhanced from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 7th February, 2020