Risk factor

The dispute shows that a reincorporation, a recapitalization, or a new stock issuance can redraw a founder's position as sharply as a financing round can, and that the paperwork executed at the moment of a corporate restructuring deserves the same scrutiny a founder gives a term sheet.

Risk factors, lever provisions, and the compounding pool, a separate risk, sits in how an option plan treats a departed holder before any exit occurs.

When Microsoft purchased Skype for dollar eight point five billion in two thousand and eleven from the Silver Lake lead investor group that had bought the company from eBay two years earlier, several former Skype employees, including former employee Yi Li, discovered that a clawback provision in the company's option plan allowed the company to repurchase vested shares from anyone who had left voluntarily before the sale closed.

The provision was disclosed in the plan documents and was lawful, and it still caught departing employees who had not read the repurchase language closely enough to understand that vesting alone did not guarantee they would keep their shares through an eventual sale.