How to handle a leaving employee's shares


I have a question about what are the best exit options for employees that own shares in a company and want to leave after some time.

For example, let's say at the start of a company the first employee was given a salary and 5% of the shares of the company, 5 years later the employee wants to leave. What are the possible exits? Purchase the shares at the current value? Given that those shares were given as a fidelity perk, can we apply discounts? Is it fair for an employee/partner to leave the company when the other partners have not yet received any dividend and keep pushing?

Partner Employees Shares Vesting

asked Jan 24 '12 at 09:38
111 points

1 Answer


This is typically the kind of problem that we try to solve with founders' shares (AKA reverse vesting). However, typical vesting periods are usually ~4 years, so at 5 years this employee would be fully vested, anyways.

If the employee's leaving the company after 5 years, frankly, they've earned their shares. They can hold on to them, or offer to sell them back to the company or the other shareholders, according to your shareholders agreement and right of first refusal and all that.

But they're not entitled to a cash-out at the current valuation.

answered Jan 24 '12 at 09:53
Evan P.
181 points

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Partner Employees Shares Vesting