The clawback – a suitable moniker, if there has been one – will probably be hidden on the back of your stock options agreement. It can be formulated in a language such as “business buy-back rights,” “withdrawal” or “forfeiture.” But what this means is that the company can “roll back” your free movement options before they become valuable. The tour consists of anticipating and preparing the situation in which one of your co-founders leaves the business. The much more common situation is that the founders have to leave the trails or have to redeploy equity for reasons of non-compliance or non-participation and there is no agreement. First, a few words. In startups, especially with venture capital, “employees expect traditional ownership of their shares, that is, you can buy and hold shares until an event like the acquisition or IPO,” says Palo Alto, Calif.-based lawyer Mary Russell, founder of Stock Option Counsel, P.C., which serves employees, executives and founders. “In a real private equity plan, executives and employees earn shares they own even after leaving the company. There are special rules and vesting and requirements for the exercise of options, but once the shares are won and the options are exercised, these shareholders have real property rights. But for startups with reclaim rights, individuals earn shares that they don`t really own” freely and clearly.
There are many differences between a standard right of redemption and vesting. However, “clawbacks on the rise” were among the top 10 trends for 2016, according to the National Association of Stock Plan Professionals. Russell said Forbes.com that she didn`t see a big leap forward in stock options, “but we certainly see enough to make all startup employees aware of this and do their due diligence. And that means asking the company for its capital policy and negotiating the terms in small print before joining. Unlike a reference fee, the method of payment should be defined in the shareholder agreement at the time of valuation and other valuation methods. As a general rule, shareholders agree that a portion must be paid at a closing and the rest must be paid over time.