Introduction
This workflow will help you process the termination of an employee, consultant, or other stockholder from your company. The workflow will guide you through the details of the separation and handle equity-related matters (including the repurchase of stock, if applicable).
This workflow can be used for any type of termination, whether the team member is leaving on their own accord or if the company is initiating the separation.
Running the workflow
Let's get started
The Terminate an Employee/Consultant or Other Stakeholder workflow is found in the Human Resources category of the Start a New Workflow page. This workflow will give you the ability to upload a resignation letter, termination notice, and/or separation agreement; however, this workflow does not generate these documents.
Terminate stakeholder
Select the employee, consultant, advisor, board member, or other stakeholder that will be terminated.
Enter details
Enter the details of the termination. The Effective Separation Date and Reason for Separation are required, but you can capture additional details about the termination. Documents related to the termination can be uploaded for reference but will not be available to view by the terminated employee.
Checkpoint
Review the details of the termination, as well as any uploaded documents. The workflow will also generate an internal Termination Memo. This is an internal document and is not sent to the terminated employee. When you are ready to process the termination, click Continue. If the employee does not have any purchased unvested shares (such as from an RSA or an early exercised stock option) the workflow will complete after this checkpoint.
Confirm termination date
The termination date is used to update vesting and the post-termination exercise window. The current ownership and vesting status is shown in the table. If you change the termination date, click Update Table to refresh the vesting information.
Define window to exercise options
Confirm the post-termination exercise window and any applicable acceleration is correct for the listed grants. Click the Edit icon to change the window to exercise and/or the acceleration. If the employee does not have any option grants this step will be skipped.
Define acceleration for RSUs
Confirm if any listed RSUs should receive accelerated vesting, or if the RSU needs to be forfeited. If there are no granted RSUs this step will be skipped.
Process grant updates
The system may take a few minutes to process the updates to the outstanding grants. You can return to the workflow from the Company Workspace at a later time.
Repurchase unvested shares
If the employee has unvested Restricted Stock and/or unvested options that were early exercised, you will be prompted to repurchase those unvested shares. This screen will show all applicable grants with details of their vested and unvested shares. Select if you want to repurchase the unvested shares and click Continue.
Select method of repurchase
If the RSA was issued under the Stock Incentive Plan, you'll be offered the choice to upload the repurchase agreement, or have Fidelity Private Shares generate it for you. If the RSA was issued outside the Stock Incentive Plan, then the repurchase agreement must be uploaded; this is because RSAs outside the plan are typically founder shares, and these sorts of terminations are complicated and sensitive.
View affected certificates
Any certificates that are to be repurchased will display. Click Confirm and verify the number of shares to be repurchased.
Checkpoint
Review the details and documents of the termination and repurchase. Clicking Continue will send out the repurchase agreement(s) and resulting stock certificate(s) for signature.
Wait for signatures
The workflow will notify the designated signatories. Once all signatures have been acquired, the workflow will continue.
Upload evidence of repurchase
Click Info Needed to certify the shares have been repurchased by the company and to upload evidence of the repurchase. Once verified, the workflow will complete.
FAQs
What happens to their account access? Once this workflow is complete, any access the employee may have had to company documentation will be removed. The employee retains access to their own workspace and their employment documentation. The employee will still be listed in the User Directory.
What happens to their shares and/or options? For option grants, typically any unvested shares are forfeited and will return to the Stock Incentive Plan on the date of termination. Any vested shares are available for exercise within the purchase window set forth in the plan or purchase agreement, typically 90 days for a voluntary or involuntary termination. This window may vary depending on the type of termination. Once this window closes, those unexercised shares are forfeited and returned back to the plan. They will keep any exercised shares.
If they have restricted stock and/or have early exercised options that have not yet vested, the company will have the option to repurchase those unvested shares. They will keep any vested shares.
When should I run the termination workflow? You can run the termination workflow when you know someone is leaving the company, and you know their exact separation date.
Does it make a difference if the person left of their own choice, or if they were fired? The workflow is equally applicable regardless of the reason they are leaving the company. The plan should outline the types of terminations and when shares will become forfeit. Generally, if someone is leaving on good terms (whether they are leaving because they want to or because they were not a good fit), their termination will be classified as being without cause. If they were fired for serious reasons it may be classified as with cause and will typically forfeit all shares upon termination. The plan may also outline terminations with a longer exercise period for reasons such as death or disability.
Do I have to run the termination workflow for people that had a clear end date in their offer letter or consulting agreement? Yes. Even if the person has a clear end date that is stated in their offer letter or consulting agreement (e.g. an intern), they still need to be terminated in the platform.
When does the termination workflow generate a Repurchase Agreement? You will be prompted to generate the repurchase agreement in the platform, or to upload your own agreement.
Screenshots are for illustrative purposes only.
Fidelity Private Shares LLC provides cap table management and other administrative services to private companies and their equity compensation plans.
Fidelity Private Shares LLC
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