- Escrow shares are shares held in an escrow account.
- Escrow means that the shares are held by a third party until certain conditions are met to reduce counterparty risk in the transaction.
- Companies will also issue shares in escrow, imposing restrictions on when shares can be sold as part of an employee compensation plan.
- Mergers and acquisitions often require the target company’s stock to be held in escrow until the transaction is completed.
- Under the compensation plan, companies often hold their shares in escrow to retain senior staff.