Dec 21, 2009
Can a company force a former employee to sell back to the company their restricted stock that was fully "vested"?
The answer will depend on the specific provisions contained in the restricted stock agreement between the company and the employee. While restricted stock agreements generally provide for the forfeiture, or repurchase by the company, of unvested stock, they can also include repurchase rights for vested stock as well. Usually, if the agreements provide for the repurchase of vested stock, the price per share is based on the then current fair market value. By contrast, in the case of unvested shares, the shares are usually either forfeited for no value or repurchased at a nominal amount, such as the par value. Similarly, if stock options were used instead of restricted stock, the company might have placed a similar contractual right on exercised stock options, allowing the company to repurchase the shares at fair market value at the time of a departure. You should review the specific terms of your agreement with the company and consult an attorney as needed.
