Carta Collective

If we create a new equity plan, can we have the shares available for issuance under the old plan, and any forfeited (cancelled, etc.) securities under the old plan automatically be added to the new plan share pool?

Hi Shari -  Your share plan documents for your new equity plan, would have addressed how to handle your old plan, if the forfeited securities can be added to your new plan.  

Hi Christie, we haven't created the new plan yet. Just wondering if that is something that we can do. 

Hi Shari,

In case you haven't found an answer elsewhere, there are 2 parts to what you're referring to:

1) A "Pourover" is the term for when cancelled/forfeited shares from awards issued out of the old plan pouring into the new  plan.  You have to contact Carta Support in order to have this configured.  *** I've found that it's important to make sure records, terminations etc. are up to date before retiring the old plan and affecting the pourover or Carta can get out of whack on the balances. 

2) Moving the remaining balance of shares still available to issue from the old plan is also something Carta Support would need to handle.  Depending on how the legal docs and plans were designed, I've seen companies take 1 of 2 approaches, the first one being more common.

1. Specify in the board approval, plan docs etc. that XXX,XXX shares are now authorized for the old plan (only the amount that was outstanding at the time the old plan is retired), mention that YYY,YYY shares (the remaining pool balance) will TRANSFER to the new plan, summing Z,ZZZ,ZZZ shares authorized for the new plan.
2. """ XXX,XXX shares "" authorized for the old plan "", YYY,YYY shares (old pool balances) will outright CANCEL, and  Z,ZZZ,ZZZ shares authorized in the new plan, a figure somewhat independently decided without explicitly math'ing the old balance in.

In the latter scenario, an adjustment to reduce the old share pool/plan should take care of things, but I would still check with Carta Support to see how Carta itself would prefer that happen. 

Good luck! I'm happy to share my experience further if needed. Feel free to reach out to me at equityconsulting@bpm.com 

-Alex