BSPCEs, stock options and free share awards when leaving a company
For executives and senior executives holding BSPCEs, stock options or free share awards, leaving a company may have significant consequences for rights that have already vested or are still vesting.
Depending on the scheme and the applicable documentation, the timing and circumstances of your departure may affect the vesting, exercise or retention of your rights.
As an employment lawyer, I advise executives and senior executives in Aix-en-Provence, Paris and throughout France on assessing these issues and incorporating them into their overall departure strategy.
Why should you review your BSPCEs, stock options or free share awards before leaving?
The value of a departure offer cannot always be assessed solely on the basis of the severance payments proposed.
Where part of your compensation or incentive package is based on equity-related instruments, what happens to those rights may significantly affect the overall financial outcome of your departure.
It is therefore essential to identify which rights have vested, which are still vesting, and how your departure may affect each of them before determining the terms of termination.
BSPCE
BSPCEs: what happens when you leave the company?
BSPCEs (Bons de souscription de parts de créateur d’entreprise – French startup share warrants) allow beneficiaries, subject to certain conditions, to subscribe for company shares at a price determined when they are granted.
When leaving the company, it is important to review which rights are already exercisable, which have not yet vested, any continued employment conditions, and the deadlines set out in the applicable documentation.
The departure date may therefore be an important factor and should be assessed against the timetable set out in the plan or award documentation.
Stock-options
Stock options: reviewing the exercise conditions
Stock options give beneficiaries the right to purchase or subscribe for shares under the terms of the applicable plan.
When leaving the company, it is important to review the vesting schedule, exercise conditions and the consequences of the termination of your position or employment contract.
Depending on the applicable rules, the circumstances and timing of your departure may affect your ability to exercise some or all of your options.
Free share awards
Free share awards: identifying vested and unvested rights
Free share awards are subject to a specific timetable and conditions that should be reviewed before leaving the company.
It is important to identify which shares have fully vested, which are still vesting, and any conditions that may affect their final allocation.
The objective is to assess the implications of the departure before its date and terms are finalised.
Vesting
Vesting: why is the timing of your departure important?
Equity incentive schemes may provide for rights to vest progressively over time.
Where a vesting schedule applies, a difference of a few weeks or months may affect the beneficiary’s position and the rights that may vest.
The vesting schedule should therefore be reviewed alongside the proposed departure date in order to assess the implications of the different scenarios.
Good Leaver / Bad Leaver
Good Leaver / Bad Leaver: can the circumstances of your departure affect your rights?
Some management packages include Good Leaver or Bad Leaver provisions.
Depending on how they are drafted, the circumstances of your departure may affect the shares or rights you hold, the conditions governing their retention or transfer, and their valuation.
These provisions should therefore be reviewed alongside the relevant BSPCEs, stock options or free share awards.
Are these instruments part of a management package?
BSPCEs, stock options and free share awards may form part of a management package, but the package should be assessed as a whole.
Other documents or arrangements may determine the executive’s rights and the consequences of their departure.
The various instruments should therefore be reviewed within the broader context of the management package and the terms of the executive’s departure.
Incorporating equity into departure negotiations
The impact of the departure on equity instruments should be considered alongside the other elements of the negotiation: severance payments, variable compensation, bonuses, notice period, non-compete clause and departure date.
The objective is to avoid negotiating one element in isolation when a change in the timing or terms of departure may affect other rights.
The assessment of BSPCEs, stock options and free share awards should therefore form part of the overall negotiation of the terms of departure.
When should you have your BSPCEs, stock options or free share awards reviewed?
Ideally, before agreeing to a departure date or terms.
This review can be particularly important when a vesting or exercise deadline is approaching, when a mutual termination agreement is proposed, or when a dismissal or another form of termination is being considered.
If discussions have already begun, a prompt review of the relevant documents can help identify the implications of the different scenarios before an agreement is finalised.
An employment lawyer in Aix-en-Provence and Paris
I advise executives and senior executives in Aix-en-Provence and Paris, both in person and remotely.
Consultations can be conducted in French or English, particularly for international executives and senior executives benefiting from equity incentive schemes as part of their employment in France.
FAQ
Frequently asked questions about BSPCEs, stock options and free share awards when leaving a company
Contact domaniewicz avocat
42 Avenue Victor Hugo
13100 Aix-en-Provence
9 Rue Treilhard
75008 Paris
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