Shareholder
A shareholder, is an individual or entity that legally owns one or more shares of stock in a public or private corporation. Shareholders are essentially partial owners of the company and can exercise certain rights such as voting at shareholder meetings and receiving dividends, depending on the type of stock they hold.
Asset Class
Common and preferred stocks, alongside Equitshares, represent distinct asset classes within the equity market. Typically common stock grants voting rights and variable dividends, while preferred stock, though lacking in voting rights, assures fixed dividends and liquidation preference over common stocks. Equitshares, as a novel asset class, introduces a unique value proposition, offering innovative ways for companies to engage in value sharing and employee rewards, potentially redefining traditional asset classification in equity management.
Grant Type
Specific categories of equity compensation awarded to employees, each representing a different form of ownership interest or rights in a company:
- Equinomy Assets: A novel category of digital assets like equitshares, designed specifically for employee rewards and engagement within the equity framework.
- Stock Options: Employees have the right to purchase company stock at a predetermined price after a vesting period, potentially allowing them to benefit from the company’s growth.
- Restricted Stock Awards (RSAs): Shares given directly to employees as part of their compensation, with ownership subject to meeting certain conditions or vesting over time.
- Restricted Stock Units (RSUs): Company promises to grant shares or the cash equivalent of shares once specific vesting conditions are met, offering employees a stake in the company without immediate stock ownership.
- Phantom (Virtual) Shares: Offer cash payments to employees based on the value of the company’s shares, mimicking stock ownership benefits without transferring actual shares, useful for aligning employee incentives with company performance.
Pool
Designated allotment of shares or equity-based assets set aside by a company to fulfill employee compensation. The pool is utilized to allocate various asset classes, including common and preferred stocks or equitshares. The size and distribution of the pool are strategically managed to align with the company’s goals, ensuring sufficient equity is available to attract, retain, and motivate employees and stakeholders while preserving company ownership and control.
Plan
Outlines the structured process by which asset classes are vested to recipients based on specific grant types and a predetermined vesting schedule. The plan delineates the conditions under which employees or stakeholders become entitled to certain assets, detailing the timeline, milestones, or performance criteria required for the vesting of asset classes. The vesting schedule, a key component of the plan, specifies the intervals at which portions of the asset grant become fully owned by the recipient, effectively tying asset allocation to tenure, achievements, or company performance, thereby aligning the interests of the employees with the goals of the company.
Vesting Schedule
A timeline that outlines the conditions under which employees or stakeholders in a company earn the right to their granted equity. This schedule includes specific elements like a “cliff,” “rate,” and “period” to detail the process of vesting:
- Cliff: This refers to the initial period during which no vesting occurs. The cliff is typically set at the beginning of the vesting schedule, often lasting for a year or more. If the employee leaves the company before the cliff period ends, they forfeit the rights to any of the equity that was granted.
- Rate: After the cliff period, the vesting rate determines how the remaining equity is granted over time. This can be expressed as a monthly, quarterly, or yearly rate, indicating the percentage or number of shares that become vested and therefore owned by the employee or stakeholder.
- Period: The vesting period is the total time it takes for all the granted equity to become vested, from the start date through to the final vesting date. This period encompasses the cliff and extends until the employee has earned the right to all their granted equity, according to the predetermined rate.
