Glossary
The Alternative Minimum Tax (AMT) is a parallel tax system in the United States designed to ensure that high-income individuals, corporations, estates, and trusts pay a minimum amount of tax regardless of deductions and exemptions, preventing excessive tax avoidance.
A double-trigger RSU is a type of Restricted Stock Unit that requires two events in order for a "change of control" to occur. Typically, the first event would be an employee hitting a vesting milestone by remaining at the company. The second trigger is usually a liquidity trigger that is satisfied once thei company goes public or is acquired.
TBD
Equity is the value of a stockholder's shares, representing their fractional ownership of the company.
Exercising options means acting upon your right to buy or sell your options, according to the terms of your options contract.
An interest rate is the specific percentage of your total loan amount that you pay a lender over the course of your loan, on top of the principal loan amount.
An initial public offering, or IPO, occurs when a privately owned company makes its shares available for purchase by the publicly listing them on the stock exchange.
A line of credit is the specific amount of money you are entitled to borrow when taking out a loan.
Liquidity is the measure of how easily an asset can be converted into available-to-use cash without negatively impacting the asset's price.
Loan collateral includes any physical or financial assets that the borrower can leverage to secure a loan. This might include a home, a car, an investment, cash, and more.
Loan consolidation is the combining of two or more separate loans into one. Typically, a loan will be transferred from one lender to another for a fee. The borrowser can then pay off the loan to one lender, at one specified interest rate.
A non-recourse loan prevents the lender from pursuing any assets beyond the collateral pledged to the loan. For example, in the case of financing a home, defaulting on your mortgage would only entitle the lender to foreclose on the home itself — not additional assets or properties.
Private company options are stock options issued to employees of private companies, which entitle them to purchase shares in the company. Employees can exercise their options according to the terms of their options contract.
A single trigger RSU uses a service-based or time-based vesting schedule, meaning shares vest on a predetermined schedule. A single triggering event (like a merger or acquisition) typically leads to a "change of control" where the shares become liquid. These are less common than double trigger RSUs.
A tender offer occurs when a company decides to allow its employees to sell shares at a predetermined price. Typically, a company representative will go to market to determine the pricing and demand for the tender, and then allocate the funds to employees based on how many shares they intend to sell.