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Equity Compensation 101
By Gary T. Moyer, April 11, 2000
Restricted Stock Purchase Plan
- Example: Company is worth $10 million. Employee gives the Company a $1 million promissory note for restricted stock equal to 10% of the Company’s outstanding stock. The stock vests equally over five years. The note is structured so that it is forgiven in equal increments over five years if and as the employee remains employed by the Company. When the employee leaves the Company, (s)he must sell back to the Company (via note forgiveness) the unvested stock, and the Company has an option to then purchase the vested stock at its then fair market value.
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