Mandatorily Redeemable Shares
 |
Definition of 'Mandatorily Redeemable Shares'Shares owned by an individual or entity which are required to be redeemed for cash or another such property at a stated time or following a specific event. Mandatorily reedemable shares are often issued by employers as a sort of compensation kicker to employees; however, the employer would require the employees to redeem these shares for cash or bonds, for example in the case of certain prescribed events or timelines. |
 |
Investopedia explains 'Mandatorily Redeemable Shares'One example of a situation where an employer would issue manditorily redeemable shares would be in the case of an employee quitting the firm. The employer would excercise its "call" option on these shares forcing the exiting employee to sell back his or her company shares. An employer might do this in a situation where the shares are restricted and greatly in the money, or if it is a closely-held company with relatively few shares in float. |
Related Definitions
Articles Of Interest
-
A Breakdown Of Stock Buybacks
Find out what these company programs achieve and what it means for stockholders. -
The "True" Cost Of Stock Options
Perhaps the real cost of employee stock options is already accounted for in the expense of buyback programs. -
Should Employees Be Compensated With Stock Options?
Learn the good, the bad and the ugly sides of this type of payout. -
The Controversy Over Option Expensing
There has been much debate over whether companies should treat employee stocks options as an expense. This article examines both sides of the argument. -
Old Stock Certificates: Lost Treasure Or Wallpaper?
What if you've discovered some old shares in bearer form? Follow our tips and find out what they're worth. -
Investing In Stock Rights And Warrants
Many companies choose to issue rights or warrants as an alternative means of generating capital to avoid dilution of existing share value. -
What Determines Your Cost Basis?
In any transaction between a buyer and seller, the initial price paid in an exchange for a product or service will qualify as the cost basis. When it comes to securities and related financial ... -
What is the difference between redemption of shares and repurchase of shares?
Sometimes, shares of stock offered by a company are not regular, market-driven common shares. Instead, they may be preferred shares, which are considered fixed income securities and are issued ... -
What is the difference between a stock buyback and management buyout?
Each share of stock sold in the market represents partial ownership in the issuing company. If an individual or entity buys enough of these shares, they can take what's called a controlling interest ... -
Employees Vs. Investors
Who is more important to the CEO and a company's bottom line? Is it employees or company shareholders?
Free Annual Reports