Contingent Shares

DEFINITION of 'Contingent Shares'

Shares of company stock that are issued only if certain conditions are met. Contingent shares are similar to stock options, warrants and other convertible instruments in that there is a level of uncertainty associated with their issue. For example, for contingent shares to be issued, the corporation must generate earnings that exceed a certain threshold. Contingent shares are also important for common stock holders since the contingent shares can dilute the ownership of existing shareholders.

BREAKING DOWN 'Contingent Shares'

In the TARP bailout, the U.S. Treasury was granted contingent shares in certain companies. These shares were meant to offset the risk of loss for taxpayers. Under the terms of the agreement, the contingent shares vest automatically if the U.S. Treasury loses money as a result of purchasing the troubled assets.

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RELATED FAQS
  1. How are contingent liabilities reflected on a balance sheet

    Find out how to identify, treat and report contingent liabilities on the balance sheet. See how the U.S. GAAP requires contingent ... Read Answer >>
  2. What does U.S. law say about contingent beneficiaries?

    Learn about regulations the United States has on the naming of contingent beneficiaries, the types of contingencies that ... Read Answer >>
  3. If both the primary and contingent beneficiaries are unavailable, what happens to ...

    Understand the difference between primary and contingent beneficiaries and what happens to assets when neither are present ... Read Answer >>
  4. What's the difference between a capital stock and a treasury stock?

    Learn about treasury capital stock, how to calculate a company's capital and treasury stock, and the differences between ... Read Answer >>
  5. How do you mediate a dispute between primary and contingent beneficiaries of a trust?

    Learn about some of the different methods for resolving disputes between primary and contingent beneficiaries on transfer ... Read Answer >>
  6. Why would I need to know how many outstanding shares the shareholders have?

    Find out why shareholders should know how many outstanding shares have been issued by a corporation, and learn what happens ... Read Answer >>
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