Vesting & transfer restrictions Flashcards
What type of stock does vesting apply to
Common stock grants and stock options
How does stock typically vest?
When you first buy an amount of stock they are unearned (unvested) and each year or whatever the date of separation is a certain amount of the shares vest.
At what price would a company buy back unvested shares?
at the lower of the stock fair market value OR the cost of the stock to the shareholder
What happens to vested shares once a shareholder leaves a company?
They can keep them and sell at any time but other mechanisms allow the company to repurchase the shares.
What is cliff vesting?
vesting that occurs all at once or partially at once, after a specified period of time.
What is the right of first refusal?
If a shareholder wants to transfer stock, the company, its assignees, or other shareholders must have the opportunity to buy the stock w/ the same terms as the 3rd party.
What is the repurchase right?
Let a company restrict the transfer of shares issued. Company usually buys back stock at above FMV.
How can a company buy back all vested and unvested shares?
Using ROFR & the repurchase right together.
