Question about share dilution

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
Post Reply
traderlmd
Posts: 8
Joined: Mon Jul 23, 2018 8:33 pm

Question about share dilution

Post by traderlmd » Mon Jul 23, 2018 8:52 pm

Say a company is trading at $100 a share. The company has 10 million shares outstanding (giving the company a market cap of $1 billion) and you hold 10,000 shares giving you a 0.1% stake in the company ($1 million). If the company issues another 1 million shares, you would own $1 million of the company but the company would now be worth $1.1 billion giving you a .0091% stake in the company? Is this correct? So, basically, your shares can get diluted without your permission. Isn't this a deterrent to investing?

User avatar
David Jay
Posts: 5677
Joined: Mon Mar 30, 2015 5:54 am
Location: Michigan

Re: Question about share dilution

Post by David Jay » Mon Jul 23, 2018 9:31 pm

More likely, the company is still worth 1 billion, the share value drops to $91 and your percentage is .091%.

The management can’t do this privately, it is public information. It is part of the decision making before purchasing stock in a particular company. If a management team has a history of diluting share value I would not want to hold that company’s stock.

What is happening more commonly among large companies is share buybacks. That goes the opposite direction, concentrating share value. In your example above, the company buys back 10,000 shares. Now a billion dollar company has only 9M shares outstanding and your shares are worth $110 and your ownership stake is .11%
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius

Sportswhiz00
Posts: 155
Joined: Mon Aug 18, 2014 8:04 pm

Re: Question about share dilution

Post by Sportswhiz00 » Mon Jul 23, 2018 9:39 pm

The price PER SHARE doesn’t change whether the company buys back or issues more stock. It will be 100 per share in either example above. (If company sells shares, it gets extra cash but at 100 per share so no change. If company buys shares it has less cash so value goes down but price was 100 per share so it evens out.) If it did change would be creating money out of thin air. What does change is your ownership percentage, meaning your percentage of future gains. So company buys back shares because it believes stock price is undervalued; bc you have a bigger ownership percentage you would get more of FUTURE gains.

Note that if the company is public, It’s unlikely that they will sell additional shares — rather they would use debt to raise money. Better for shareholders.

User avatar
grabiner
Advisory Board
Posts: 22890
Joined: Tue Feb 20, 2007 11:58 pm
Location: Columbia, MD

Re: Question about share dilution

Post by grabiner » Mon Jul 23, 2018 9:41 pm

David Jay wrote:
Mon Jul 23, 2018 9:31 pm
More likely, the company is still worth 1 billion, the share value drops to $91 and your percentage is .091%.
This depends on what is done with the shares. If the company issues new stock and sells it to the public, it has more cash, so you own a smaller fraction of a more valuable company, and break even. If the company issues new stock and uses it for employee compensation, this is of no direct value to shareholders (although the compensation is in lieu of cash payments which would reduce the share price by using up company cash).
What is happening more commonly among large companies is share buybacks. That goes the opposite direction, concentrating share value. In your example above, the company buys back 10,000 shares. Now a billion dollar company has only 9M shares outstanding and your shares are worth $110 and your ownership stake is .11%
As above, the value of your shares doesn't change, because the company converted cash to shares of equal value. If the company buys back 10,000 shares, it loses $1M in cash, reducing the value of what shareholders have. (If the company instead paid a dividend of 10 cents per share, it would also lose $1M in cash, and that would reduce the value of your shares by 10 cents each, but you would get 10 cents in cash to compensate, and would again break even.)
Wiki David Grabiner

HEDGEFUNDIE
Posts: 980
Joined: Sun Oct 22, 2017 2:06 pm

Re: Question about share dilution

Post by HEDGEFUNDIE » Mon Jul 23, 2018 9:45 pm

traderlmd wrote:
Mon Jul 23, 2018 8:52 pm
Say a company is trading at $100 a share. The company has 10 million shares outstanding (giving the company a market cap of $1 billion) and you hold 10,000 shares giving you a 0.1% stake in the company ($1 million). If the company issues another 1 million shares, you would own $1 million of the company but the company would now be worth $1.1 billion giving you a .0091% stake in the company? Is this correct? So, basically, your shares can get diluted without your permission. Isn't this a deterrent to investing?
Theoretically the share issuance would have been approved by the Management who reports to the board of directors who are elected by the shareholders. So theoretically you did give your permission, just in a super-attenuated way.

User avatar
Phineas J. Whoopee
Posts: 7566
Joined: Sun Dec 18, 2011 6:18 pm

Re: Question about share dilution

Post by Phineas J. Whoopee » Tue Jul 24, 2018 12:06 pm

HEDGEFUNDIE wrote:
Mon Jul 23, 2018 9:45 pm
...
Theoretically the share issuance would have been approved by the Management who reports to the board of directors who are elected by the shareholders. So theoretically you did give your permission, just in a super-attenuated way.
Not arguing with your main point, but although management may recommend corporate actions, they're initiated and carried out by the board - probably by directing the C-suite executives to fulfill its policy decision.

PJW

barnaclebob
Posts: 3029
Joined: Thu Aug 09, 2012 10:54 am

Re: Question about share dilution

Post by barnaclebob » Tue Jul 24, 2018 12:15 pm

Are you really talking about penny stocks where this is common? Share dilution is usually a bad thing and will cut your share price and % of ownership. Then comes the reverse split which is really bad.

User avatar
Phineas J. Whoopee
Posts: 7566
Joined: Sun Dec 18, 2011 6:18 pm

Re: Question about share dilution

Post by Phineas J. Whoopee » Tue Jul 24, 2018 12:23 pm

barnaclebob wrote:
Tue Jul 24, 2018 12:15 pm
... Then comes the reverse split which is really bad.
Aside from the fact that reverse splits are most usually undertaken when the share price has greatly fallen, what's wrong with them?

PJW

alex_686
Posts: 3920
Joined: Mon Feb 09, 2015 2:39 pm

Re: Question about share dilution

Post by alex_686 » Tue Jul 24, 2018 12:29 pm

traderlmd wrote:
Mon Jul 23, 2018 8:52 pm
Say a company is trading at $100 a share. The company has 10 million shares outstanding (giving the company a market cap of $1 billion) and you hold 10,000 shares giving you a 0.1% stake in the company ($1 million). If the company issues another 1 million shares, you would own $1 million of the company but the company would now be worth $1.1 billion giving you a .0091% stake in the company? Is this correct? So, basically, your shares can get diluted without your permission. Isn't this a deterrent to investing?
Welcome to the forum.

Your analysis is correct. In theory, the issuance of new stock does not diminish the value of the stock you hold but it does dilute your voting power. In practice the issue is complex and nuanced. It is often better to pay employees with stock and stock options. Cheaper than actual cash and it motivates the employees. On the other hand, if the stock and options are priced too cheaply then value leaks from the owners to management. Lots of nuance here.

It is not much of a deterrent to investing. With the exception of employee stock options, issuing new stock is expensive and is the last choice for raising new funds. For most of us the dilution of voting power does not matter much unless their is a proxy fight going on and your interested in these things. There are many controls to make sure this is not abused. The last big abusive situation I can think of in a developed market was cheap options issued during the dot.com boom.

alex_686
Posts: 3920
Joined: Mon Feb 09, 2015 2:39 pm

Re: Question about share dilution

Post by alex_686 » Tue Jul 24, 2018 12:30 pm

Phineas J. Whoopee wrote:
Tue Jul 24, 2018 12:23 pm
barnaclebob wrote:
Tue Jul 24, 2018 12:15 pm
... Then comes the reverse split which is really bad.
Aside from the fact that reverse splits are most usually undertaken when the share price has greatly fallen, what's wrong with them?
I will second that. I can't think of any real downside to splits, either forwards or backwards. Of course if a company has to do a reverse split that is a symptom that the company is doing very poorly, but hardly a cause.

barnaclebob
Posts: 3029
Joined: Thu Aug 09, 2012 10:54 am

Re: Question about share dilution

Post by barnaclebob » Tue Jul 24, 2018 12:46 pm

Phineas J. Whoopee wrote:
Tue Jul 24, 2018 12:23 pm
barnaclebob wrote:
Tue Jul 24, 2018 12:15 pm
... Then comes the reverse split which is really bad.
Aside from the fact that reverse splits are most usually undertaken when the share price has greatly fallen, what's wrong with them?

PJW
When I saw it happen while watching my friend waste money on penny stocks they would do something like a 50:1 reverse split to get the price up from .001 and no bid to .05 and then continue diluting it down to .001.

But as a whole you are correct that the reverse split itself doesn't change the value. It just changes the perceived value or affordability.

traderlmd
Posts: 8
Joined: Mon Jul 23, 2018 8:33 pm

Re: Question about share dilution

Post by traderlmd » Mon Aug 06, 2018 8:28 pm

David Jay wrote:
Mon Jul 23, 2018 9:31 pm
More likely, the company is still worth 1 billion, the share value drops to $91 and your percentage is .091%.
Are you sure about this? Everyone else in this thread seems to be saying something different (that the value of the stock would not drop increasing the market cap of the company). Can anyone clarify?

Sportswhiz00
Posts: 155
Joined: Mon Aug 18, 2014 8:04 pm

Re: Question about share dilution

Post by Sportswhiz00 » Mon Aug 06, 2018 8:33 pm

traderlmd wrote:
Mon Aug 06, 2018 8:28 pm
David Jay wrote:
Mon Jul 23, 2018 9:31 pm
More likely, the company is still worth 1 billion, the share value drops to $91 and your percentage is .091%.
Are you sure about this? Everyone else in this thread seems to be saying something different (that the value of the stock would not drop increasing the market cap of the company). Can anyone clarify?
See my post above. Value per share does not change because the price paid for a share is exactly
What the share is worth. What does change is your ownership percentage so if the value increases by $x you are entitled to a lower pecertange of that $x.

jalbert
Posts: 3812
Joined: Fri Apr 10, 2015 12:29 am

Re: Question about share dilution

Post by jalbert » Mon Aug 06, 2018 8:42 pm

Normally companies issue new shares to fund new business activities. These should have the promise of future enhanced revenue.
Risk is not a guarantor of return.

Valuethinker
Posts: 36322
Joined: Fri May 11, 2007 11:07 am

Re: Question about share dilution

Post by Valuethinker » Tue Aug 07, 2018 11:31 am

traderlmd wrote:
Mon Jul 23, 2018 8:52 pm
Say a company is trading at $100 a share. The company has 10 million shares outstanding (giving the company a market cap of $1 billion) and you hold 10,000 shares giving you a 0.1% stake in the company ($1 million). If the company issues another 1 million shares, you would own $1 million of the company but the company would now be worth $1.1 billion giving you a .0091% stake in the company? Is this correct? So, basically, your shares can get diluted without your permission. Isn't this a deterrent to investing?
If the company does a 1 for 10 split the share price drops by an equivalent amount so your holding of 11,000 shares has the same value.

Easier to see if a 2 for 1 split. You now have 20,000 shares but the share price is $50 each so your holding is still worth $1m.

If the company issues new shares to investors, then the process is (as an example):

- at the AGM, a shareholder resolution allows the Board as it sees fit to direct the company to issue more shares and allocate them to investors

- when the company needs to raise more money, its lawyers prepare the documentation alongside the accountants and investment bank. Normally a Prospectus is required and associated SEC filings.

Investment bank or banks then solicit offers for the new shares from investors, usually institutional, via a roadshow process where management presents to potential investors or existing shareholders wishing to take more stock. To entice the investors, the shares are usually offered at a discount to the current share price.

- shares are then sold to investors. Company receives cash. Existing shareholders have been diluted by 10% BUT the company has more cash in it. Actual degree of dilution is 10% (for existing shareholders who do not participate in the fund raise) however the company now has more cash in it, so that increases its value per share (but not necessarily to fully offset the fund raise - could be more could be less)

(I have adapted the UK position to a US example. The main difference is that with the exception of small fund raisings, the existing shareholders have a pre emption right - the ability to subscribe to the new shares (at the new issue price) in proportion to their holdings (so a 10% shareholder would get rights over 100k of a 1m new share issue). Only if they do not fully subscribe are their additional newly issued shares which are placed by the investment bank with new investors.

Valuethinker
Posts: 36322
Joined: Fri May 11, 2007 11:07 am

Re: Question about share dilution

Post by Valuethinker » Tue Aug 07, 2018 11:37 am

jalbert wrote:
Mon Aug 06, 2018 8:42 pm
Normally companies issue new shares to fund new business activities. These should have the promise of future enhanced revenue.
Or it may be to repay debt. Or to acquire another business.

The problem with cash is that it will dilute Earnings Per Share. The return on cash is very low (near zero) and so the increment in profits will be smaller than the increase in share capital -- thus profits/ shares = EPS will fall.

(exception is if repaying very high interest debt).

So companies have to be very clear how they are going to spend that money (the higher the PE of the stock the "cheaper" that equity capital is, in terms of EPS dilution). That messaging to shareholders is key.

traderlmd
Posts: 8
Joined: Mon Jul 23, 2018 8:33 pm

Re: Question about share dilution

Post by traderlmd » Tue Aug 07, 2018 10:31 pm

Sportswhiz00 wrote:
Mon Aug 06, 2018 8:33 pm
traderlmd wrote:
Mon Aug 06, 2018 8:28 pm
David Jay wrote:
Mon Jul 23, 2018 9:31 pm
More likely, the company is still worth 1 billion, the share value drops to $91 and your percentage is .091%.
Are you sure about this? Everyone else in this thread seems to be saying something different (that the value of the stock would not drop increasing the market cap of the company). Can anyone clarify?
See my post above. Value per share does not change because the price paid for a share is exactly
What the share is worth. What does change is your ownership percentage so if the value increases by $x you are entitled to a lower pecertange of that $x.
So DavidJ was incorrect? If a company issues shares then the market cap of the company will always increase (immediately following the issuance)?

MotoTrojan
Posts: 2461
Joined: Wed Feb 01, 2017 8:39 pm

Re: Question about share dilution

Post by MotoTrojan » Wed Aug 08, 2018 1:40 am

traderlmd wrote:
Tue Aug 07, 2018 10:31 pm
Sportswhiz00 wrote:
Mon Aug 06, 2018 8:33 pm
traderlmd wrote:
Mon Aug 06, 2018 8:28 pm
David Jay wrote:
Mon Jul 23, 2018 9:31 pm
More likely, the company is still worth 1 billion, the share value drops to $91 and your percentage is .091%.
Are you sure about this? Everyone else in this thread seems to be saying something different (that the value of the stock would not drop increasing the market cap of the company). Can anyone clarify?
See my post above. Value per share does not change because the price paid for a share is exactly
What the share is worth. What does change is your ownership percentage so if the value increases by $x you are entitled to a lower pecertange of that $x.
So DavidJ was incorrect? If a company issues shares then the market cap of the company will always increase (immediately following the issuance)?
No the share price will decrease due to dilution, with the market cap unchanged. I imagine the cap could actually decrease temporarily when it is known or even presumed that a company will be issuing additional shares, but prior to it occurring.

This is common with start-ups but with private stock you don’t have market fluctuations. Dilution could be as much as a 50% cut, but you’d hope the new valuation is substantial enough that dollar-value increases still.

Valuethinker
Posts: 36322
Joined: Fri May 11, 2007 11:07 am

Re: Question about share dilution

Post by Valuethinker » Wed Aug 08, 2018 3:53 am

alex_686 wrote:
Tue Jul 24, 2018 12:30 pm
Phineas J. Whoopee wrote:
Tue Jul 24, 2018 12:23 pm
barnaclebob wrote:
Tue Jul 24, 2018 12:15 pm
... Then comes the reverse split which is really bad.
Aside from the fact that reverse splits are most usually undertaken when the share price has greatly fallen, what's wrong with them?
I will second that. I can't think of any real downside to splits, either forwards or backwards. Of course if a company has to do a reverse split that is a symptom that the company is doing very poorly, but hardly a cause.
Be aware of the Warren Buffett critique, followed by many value investors (that have funds with a stock market listing).

In doing a split, costs are being incurred. The company may not pay them, the shareholder may not pay them, directly. But there is a cost for the associated paperwork. Someone is losing value.

Berkshire Hathaway only initiated "B" shares when someone was planning to offer a tracker stock (like an ADR) with a lower price - in effect taking a profit from BH shareholders (who bought these lower priced tracker shares). Buffett then initiated then 10 for 1 shares to prevent them from doing that economically.

User avatar
GoldStar
Posts: 600
Joined: Wed May 23, 2018 10:59 am

Re: Question about share dilution

Post by GoldStar » Wed Aug 08, 2018 6:17 am

Most responses above are assuming you are talking about a publicly traded company. (Probably because you mention a $1B company).
This is certainly very common with private-equity/start-up companies. A start-up will go through a series of rounds whereby they raise money.
If you get in during the first round you are surely going to be heavily diluted when they raise money and issue shares during round-2 and round-3 (unless of course you put additional money in during these rounds). There are are also publicly traded companies that are taken Private (Dell, Riverbed, etc.) many of which are worth $1B or more when the event happens. In these cases I don't believe dilution is as common if you hold the private-equity shares.

Valuethinker
Posts: 36322
Joined: Fri May 11, 2007 11:07 am

Re: Question about share dilution

Post by Valuethinker » Wed Aug 08, 2018 7:25 am

GoldStar wrote:
Wed Aug 08, 2018 6:17 am
Most responses above are assuming you are talking about a publicly traded company. (Probably because you mention a $1B company).
This is certainly very common with private-equity/start-up companies. A start-up will go through a series of rounds whereby they raise money.
If you get in during the first round you are surely going to be heavily diluted when they raise money and issue shares during round-2 and round-3 (unless of course you put additional money in during these rounds). There are are also publicly traded companies that are taken Private (Dell, Riverbed, etc.) many of which are worth $1B or more when the event happens. In these cases I don't believe dilution is as common if you hold the private-equity shares.
If the deal is a Leveraged Buy Out (Dell), then the whole trick is "Other Peoples' Money" OPM i.e. use of debt to enhance returns of equity.

So you are correct, further equity investment is only made if the business becomes distressed. Often as a prerequisite of the banks being prepared to "take a haircut" i.e. suffer a reduction in the face value of the company's debt, they insist equity providers put more "skin in the game". Further investment will destroy the Internal Rate of Return (IRR) of the initial equity investments.

The PE fund will only do this if they think there is value to be recovered. Complicating the picture, distressed debt firms like Cerberus may step in and buy up the debt from the banks and bondholders, then negotiate very hard in the interests of the debt holders - they may wind up owning the firm.

alex_686
Posts: 3920
Joined: Mon Feb 09, 2015 2:39 pm

Re: Question about share dilution

Post by alex_686 » Wed Aug 08, 2018 1:40 pm

Valuethinker wrote:
Wed Aug 08, 2018 3:53 am
alex_686 wrote:
Tue Jul 24, 2018 12:30 pm
Phineas J. Whoopee wrote:
Tue Jul 24, 2018 12:23 pm
barnaclebob wrote:
Tue Jul 24, 2018 12:15 pm
... Then comes the reverse split which is really bad.
Aside from the fact that reverse splits are most usually undertaken when the share price has greatly fallen, what's wrong with them?
I will second that. I can't think of any real downside to splits, either forwards or backwards. Of course if a company has to do a reverse split that is a symptom that the company is doing very poorly, but hardly a cause.
Be aware of the Warren Buffett critique, followed by many value investors (that have funds with a stock market listing).

In doing a split, costs are being incurred. The company may not pay them, the shareholder may not pay them, directly. But there is a cost for the associated paperwork. Someone is losing value.

Berkshire Hathaway only initiated "B" shares when someone was planning to offer a tracker stock (like an ADR) with a lower price - in effect taking a profit from BH shareholders (who bought these lower priced tracker shares). Buffett then initiated then 10 for 1 shares to prevent them from doing that economically.
Having actually done this professionally, the cost is mostly born by the shareholder. However, since most shares are held electronically the cost is trivial. The functionality is part of every brokerage enterprise software that I have worked with and is mostly automated.

alex_686
Posts: 3920
Joined: Mon Feb 09, 2015 2:39 pm

Re: Question about share dilution

Post by alex_686 » Wed Aug 08, 2018 1:52 pm

MotoTrojan wrote:
Wed Aug 08, 2018 1:40 am
No the share price will decrease due to dilution, with the market cap unchanged. I imagine the cap could actually decrease temporarily when it is known or even presumed that a company will be issuing additional shares, but prior to it occurring.

This is common with start-ups but with private stock you don’t have market fluctuations. Dilution could be as much as a 50% cut, but you’d hope the new valuation is substantial enough that dollar-value increases still.
No, share price remains the same, market cap goes up. See the Modigliani–Miller Theorem. Written in the 1950s, won the Nobel in the 80s, considered to be part of the core of investment theory, born out by empirical research.

Consider a company that has a market cap of 100m and a single share. It then issues a second share for 100m. Now the company is worth 200m (100m in original market cap plus another 100m in cash), so each share is worth 100m. You shouldn't be able to manipulate the value of existing shares by issuing or repurchasing new shares. If that were true one could print money out of thin air.
Valuethinker wrote:
Tue Aug 07, 2018 11:37 am
jalbert wrote:
Mon Aug 06, 2018 8:42 pm
Normally companies issue new shares to fund new business activities. These should have the promise of future enhanced revenue.
Or it may be to repay debt. Or to acquire another business.

The problem with cash is that it will dilute Earnings Per Share. The return on cash is very low (near zero) and so the increment in profits will be smaller than the increase in share capital -- thus profits/ shares = EPS will fall.

(exception is if repaying very high interest debt).

So companies have to be very clear how they are going to spend that money (the higher the PE of the stock the "cheaper" that equity capital is, in terms of EPS dilution). That messaging to shareholders is key.
Yes, it does lower EPS which is bad. However it also reduces leverage, which is good. So lower earnings and lower risk. This is true even if we are retiring high interest debt, low interest debt, or just raising cash for a war chest. What is predicted in theory is mostly born out by practice. It gets tricky because investor's preferences change over time, changes in the tax law, and agency issues. But we have to look at second order impacts, not first, to see changes in the share price.

limeyx
Posts: 243
Joined: Wed Sep 07, 2016 5:34 pm

Re: Question about share dilution

Post by limeyx » Wed Aug 08, 2018 11:54 pm

Phineas J. Whoopee wrote:
Tue Jul 24, 2018 12:23 pm
barnaclebob wrote:
Tue Jul 24, 2018 12:15 pm
... Then comes the reverse split which is really bad.
Aside from the fact that reverse splits are most usually undertaken when the share price has greatly fallen, what's wrong with them?

PJW
If its a private company the initial split usually doesn't increase your vested shares but the reverse does reduce them so your vesting period effectively gets reset by potentially years

Sportswhiz00
Posts: 155
Joined: Mon Aug 18, 2014 8:04 pm

Re: Question about share dilution

Post by Sportswhiz00 » Thu Aug 09, 2018 7:04 am

limeyx wrote:
Wed Aug 08, 2018 11:54 pm
Phineas J. Whoopee wrote:
Tue Jul 24, 2018 12:23 pm
barnaclebob wrote:
Tue Jul 24, 2018 12:15 pm
... Then comes the reverse split which is really bad.
Aside from the fact that reverse splits are most usually undertaken when the share price has greatly fallen, what's wrong with them?

PJW
If its a private company the initial split usually doesn't increase your vested shares but the reverse does reduce them so your vesting period effectively gets reset by potentially years
That’s not right. A stock split or reverse stock split is not going to affect your vesting period at all. If you were 25% vested in your grant prior to the change, you’ll still be 25% vested after the change, and the remaining shares will vest on the original schedule.

Sportswhiz00
Posts: 155
Joined: Mon Aug 18, 2014 8:04 pm

Re: Question about share dilution

Post by Sportswhiz00 » Thu Aug 09, 2018 7:08 am

There is a lot of misinformation in this thread. Alex’s post two above has the right answer.

limeyx
Posts: 243
Joined: Wed Sep 07, 2016 5:34 pm

Re: Question about share dilution

Post by limeyx » Thu Aug 09, 2018 6:37 pm

Sportswhiz00 wrote:
Thu Aug 09, 2018 7:04 am
limeyx wrote:
Wed Aug 08, 2018 11:54 pm
Phineas J. Whoopee wrote:
Tue Jul 24, 2018 12:23 pm
barnaclebob wrote:
Tue Jul 24, 2018 12:15 pm
... Then comes the reverse split which is really bad.
Aside from the fact that reverse splits are most usually undertaken when the share price has greatly fallen, what's wrong with them?

PJW
If its a private company the initial split usually doesn't increase your vested shares but the reverse does reduce them so your vesting period effectively gets reset by potentially years
That’s not right. A stock split or reverse stock split is not going to affect your vesting period at all. If you were 25% vested in your grant prior to the change, you’ll still be 25% vested after the change, and the remaining shares will vest on the original schedule.
This is not true for a private company (or I got screwed during a down round in a previous company ... no matter they went out of business anyway!)

Post Reply