If an employee leaves your company there may be actions required on your ESOP. Check your plan rules for specific clauses related to leaving. There may be different clauses depending on whether the employee is a 'good leaver' or a 'bad leaver'.
In order to make changes to your ESOP you will need to be logged into Orchestra as a company Administrator.
Does vesting stop if the option holder leaves?
Go to 'ESOP & Options' in your left hand menu, then click on 'Manage pool'. Click on the name of the option holder who is leaving. Within the option grant click on 'Settings'. There are 3 choices:
- Halt entity vesting (this grant only)
- Halt entity vesting (all grants in pool)
- Halt entity vesting (all grants in company)
Individual vesting schedules can also be halted using the vesting schedule 'Edit' button.
Click 'confirm' in the confirmation window that opens up.
A Halted tag will show on vesting schedules that have been stopped. No further vesting of the halted schedules will occur.
Do the options expire if the option holder leaves?
When an employee leaves the company, they may have a set time frame in which to exercise their options. If the options aren't exercised in the time frame then they expire and are returned to the pool for reallocation.
Under 'Settings' select 'Edit entity'. In Key dates change the 'Option expiry date' and 'Save'. When the expiry date passes, any options that aren't exercised will expire and are automatically returned to the pool for reallocation.
If the employee notifies you to exercise their options, and pays the exercise price, here's how to exercise the options.
Are unvested options returned to the ESOP pool?
When an employee leaves the company, their unvested options may need to be returned to the option pool for reallocation, and they may be allowed to keep their vested options.
To return unvested options to the pool click on 'Settings' and 'Edit entity'.
In the option Grant particulars change the Number of options granted to equal the Number of vested options. A warning message will pop up as you try to complete this, as the options you are removing may be included in vesting schedules. Click 'Confirm' to continue. Change the Number of options granted. Make some notes in the grant Description to record your update for you and the employee (the grant Description is visible to the option holder).
Eg. [Employee] departed the company on 3rd February 2022. On the date of departure 140 of 300 granted options were unvested. The 140 unvested options have been returned to the pool and the original grant reduced from 300 options to 160 options.
Click 'Save'.
If an employee departs the company before any options have vested at all, a quick way to return the grant to the pool is to click on 'Settings' and 'Edit entity'. Change the 'Grant status' from 'Active' to 'Cancelled'. The option grant is retained for future record, and the options are returned to the pool for reallocation.
Can I restart a vesting schedule?
An employee may have departed your company temporarily (eg. they went on maternity leave or a sabbatical) and you halted their option vesting schedules. When they return to work you might want to start up their option vesting again. We don't recommend restarting a halted vesting schedule, as it will try to catch up, by vesting the missed events at the next vesting date.
Leave the halted vesting schedules, and enter a new vesting schedule with new vesting parameters to get vesting going again.
If you would like us to review the vesting schedules you have created, please contact us.