Good leaver / bad leaver

Contractual categories used to determine how a departing manager’s equity is treated. Triggers, vesting, repurchase prices and enforceability depend on the documents, share class and jurisdiction.

Good leaver / bad leaver in practice

Hypothetical: a plan distinguishes defined good-leaver and bad-leaver events and applies different repurchase terms. Resigning in good standing or leaving due to illness does not automatically establish a category or fair-value entitlement; the specific rules govern.

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Illustrative negotiated possibilities; no universal entitlement
IssuePossible good-leaver treatmentPossible bad-leaver treatment
TriggerSpecified events meeting the plan definitionSpecified events meeting the plan definition
Vested interestsRepurchase under the agreed price formulaDiscounted, cost-based or other agreed treatment
Unvested interestsLapse, continued vesting or acceleration only if providedLapse or other agreed treatment
QualificationDocuments, share class and law governDocuments, share class and law govern

Sweet equity & envy ratio · Vesting · Shareholder agreement · Management incentive plan (MIP) · All of the glossary