Additional Vesting Conditions
Many companies approaching a potential IPO, may wish to issue equity that will be restricted on both a time schedule and a schedule based on the achievement of a liquidity event. It's typical for these companies to issue restricted stock units (RSUs) with both a time based vesting schedule and a performance based vesting schedule. To accommodate, Carta provides an additional layer of vesting conditions that can be applied to RSUs only.
To use this tool, first navigate to Securities >> Templates and Create vesting schedule.
A modal will appear where you can select Additional vesting condition which will reflect the performance based vesting aspect of the RSUs.
When using the additional vesting condition, you will have the option of indicating what type of condition should be applied to accurately represent the restrictive conditions. The options include event-based performance condition, market-based performance condition, and performance condition.
For an example of each condition type, see the following:
- Event-based performance condition: a firm-wide condition that is satisfied after an event that affects the company as a whole such as an IPO or an acquisition.
- Market-based performance condition: a condition that becomes satisfied upon a market event such as the company reaching a valuation of $500 million or the stock price reaching a value of $50 per share.
- Performance condition: is more of an individual-focused event such as Ted Baker, the company's Director of Sales achieving a sales goal of 1,000 subscription licenses sold in his first 100 days of employment.