Bear Stearns'


stock has been red-hot the past few months, fueled by buyout speculation.

But the brokerage's employees must wait until at least next week to reap the benefits of the rally. That's because Bear is delaying the awarding of restricted stock until after the brokerage reports earnings next Tuesday.

The distribution of restricted shares was to have taken place on Nov. 30, but Bear decided against going forward with the plan, according to a Bear Stearns memorandum. The brokerage now intends to distribute shares on Dec. 22, a day after the firm reports fourth-quarter earnings.

The memo says that Bear's directors "decided at the advice of counsel" to delay the distribution until after the earnings announcement. Wall Street analysts expect Bear to report earnings of $2.14 a share, down from $2.19 a share last year.

A Bear spokesman declined to comment. People familiar with Bear say the firm was concerned about the appearance of letting its employees sell shares in advance of an earnings announcement.

Bear's stock is currently trading around $106.25. On Dec. 10, it closed at an all-time high of $106.68. The stock is up 33% this year, the biggest gainer in the brokerage sector.

The delay in the distribution of shares could have ramifications for Bear employees and Bear investors, since the shares can be freely traded on the open market once they are doled out.

It's not uncommon for brokerage stocks to sell off after an earnings announcement, especially if the stock has risen sharply before the earnings date.

It's not known how many of Bear's employees are entitled to receive shares under the firm's so-called restricted stock unit plan. But sources say several thousand employees are in line to receive the shares.

Most of the distributed shares are expected to be sold shortly after the distribution. In the memo, Bear gave employees until Dec. 17 to sign a "power of attorney" form, authorizing the firm "as to the disposition of the shares," including selling them.

On Wall Street, restricted stock has become a popular way of rewarding employees. Normally, restricted stock cannot be sold until the recipient's rights to the shares have "vested." In a restricted stock unit plan, a company doesn't award the shares until after the vesting period has expired.