Related Terms • Affiliate • Subsidiary

Definition: A stock that is issued to track a certain division of a company.   This allows managers and executives for each division to have rewards and compensation tied to the overall performance of the part of the company they control.

Example: Sprint had a cell-phone division.  They announced that they were going to create a 'tracking stock' so the market could value that particular division as opposed to having it absorbed in the company.  Each Sprint shareholder was given 1 share of PCS for every 2 shares of Sprint they owned.  Thus, they traded as two different stocks on the New York Stock Exchange, but PCS was owned by Sprint and only represented a division of its business.