Mandatorily Redeemable Shares

AAA

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 TERMS
  1. Concession

    A selling group's compensation in a stock or bond underwriting ...
  2. Extraordinary Redemption

    A provision that gives a bond issuer the right to call its bonds ...
  3. Redemption

    The return of an investor's principal in a fixed income security, ...
  4. Partial Redemption

    An investment-transaction classification that refers to the withdrawal ...
  5. Mandatory Redemption Schedule

    Specified dates when a bond issuer is required to redeem all ...
  6. Registered Holder

    Shareholders who hold their shares directly with a company.
Related Articles
  1. Investing

    A Breakdown Of Stock Buybacks

    Find out what these company programs achieve and what it means for stockholders.
  2. Options & Futures

    The "True" Cost Of Stock Options

    Perhaps the real cost of employee stock options is already accounted for in the expense of buyback programs.
  3. Options & Futures

    Should Employees Be Compensated With Stock Options?

    Learn the good, the bad and the ugly sides of this type of payout.
  4. Options & Futures

    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.
  5. Economics

    Analyzing Warren Buffett's 2013 Famous Shareholder Letter

    Reading the chairman of Berkshire Hathaway's letters has been one of the best sources of investment education for value investors around the world.
  6. Mutual Funds & ETFs

    Revealed: America’s Best (And Worst) Airlines

    The folks PO'd enough to vent about it on Twitter, “Those #AmericanAirlines losers canceled my flight!” As it turns out, those tweets can be valuable.
  7. Investing

    I get multiple mailings to my house from companies that my spouse, children and I all own. Is there ...

    It's not uncommon for there to be more than one investment account holder in one household. If multiple members of your household are shareholders of the same company, your residence might get ...
  8. Because the difference between the number of authorized and outstanding shares can be so large, it's important that you realize what they are and which figures the company is using
    Investing Basics

    The Basics Of Outstanding Shares And The Float

    We go over different types of shares and what investors need to know about them.
  9. Investing

    How Your Vote Can Change Corporate Policy

    Shareholders are getting a bigger say in how companies are run. Find out how you can be heard.
  10. Investing

    What is the difference between a shareholder and a stakeholder?

    Shareholders are stakeholders in a corporation, but stakeholders are not always shareholders. A shareholder owns part of a company through stock ownership, while a stakeholder is interested in ...

You May Also Like

Hot Definitions
  1. Deferred Revenue

    Advance payments or unearned revenue, recorded on the recipient's balance sheet as a liability, until the services have been ...
  2. Multinational Corporation - MNC

    A corporation that has its facilities and other assets in at least one country other than its home country. Such companies ...
  3. SWOT Analysis

    A tool that identifies the strengths, weaknesses, opportunities and threats of an organization. Specifically, SWOT is a basic, ...
  4. Simple Interest

    A quick method of calculating the interest charge on a loan. Simple interest is determined by multiplying the interest rate ...
  5. Special Administrative Region - SAR

    Unique geographical areas with a high degree of autonomy set up by the People's Republic of China. The Special Administrative ...
  6. Annual Percentage Rate - APR

    The annual rate that is charged for borrowing (or made by investing), expressed as a single percentage number that represents ...
Trading Center