Slicing Pie

            Claw Back

            As mentioned before, when someone resigns for good reason, or is fired for no good reason, the company can offer to buy them back at an amount equal to the outstanding slices that were calculated with the multipliers. This represents a very nice return on the individual’s investment of both cash and non-cash contributions. Most people hope they will receive a lot more, but the multipliers provide a fair return, given the risk.

            However, it’s not fair for the company to buy back the slices and then turn around and sell the company for a far better return. If a transaction takes place within a year of a buyout that would have led to higher return, the person should be paid the difference. This is known as “claw back” and it prevents the managers from firing everyone, buying back their slices a one price, and then selling the company at a higher price.

            If the person was fired for good reason or resigned for no good reason, the claw back would not apply. Talk to your Slicing Pie friendly lawyer about claw back.

            Updated: 04 Apr 2016 11:21 AM
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