Why do we give stock warrants at Tailwarden ?

• Though implementing stock warrants for employees presents challenges due to our limited presence across operating countries, our dedication to #CollectiveSuccess stands strong. We aim to ensure that every Warden shares in the company's progress and is incentivised by our collective accomplishments.
• We understand the importance of each Warden identifying with the company, and we recognise that stock warrants play a meaningful role in achieving this connection.
• We want to foster a culture of ownership and collaboration ! We want you to feel empowered to contribute and take initiative.

What is a stock warrant ? A general overview

Please be mindful that stock warrants have different names depending on your location : 🇫🇷 BSPCE

🇵🇹 BSA

🇩🇪 BSA

The definition of a stock warrant is that it gives someone the right (but not the obligation) to buy or sell a share of Tailwarden. It’s important to note that when you receive a stock warrant, you don’t directly receive a share of the company, you receive the right to purchase a share of the company at an agreed-upon price (often called the “strike-price”) and date.

<aside> ☝ Having the right to purchase a share of Tailwarden is referred to as the right to exercise your 'vested stock warrants’

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The “vesting of shares” means a gradual accumulation of ownership rights over a specified period (vesting period), typically tied to an employee's stay within the company. During the vesting period, shares become available to the employee in increments. Once vested, employees can exercise their stock warrants to buy shares at a predetermined price.

So to put it simply, a vesting period for stock warrants is the timeframe an employee must work for a company to gain the right to exercise those warrants and purchase company stock.

The vesting period at Tailwarden is 4 years, meaning that after staying for 4 years at Tailwarden, the stock warrants become fully (100%) available for purchase. Now, what does that mean concretely ? Vesting is structured such that an employee earns a portion of the stock warrants at different intervals during the vesting period. This is often referred to as “graded” or “cliff” vesting.

• 1 year : You start vesting from your first day at Tailwarden and the stock warrants are attributed to you after a successful trial period (even if those stock warrants are given to you after the end of the trial period, the starting date of the vesting period starts with the day you join Tailwarden). After one year, you have vested 25% of your stock warrants, meaning that this gives you the right to exercise those 25%. This is what we call the cliff.
• 2-4 years : After your first year you get 2,08% for each month that you stay in the company (on top of the 25% that you get at the end of your first year). (2.08% comes from 75% (remaining stocks) divided by three years (remaining vesting periods) divided by 12 (number of months in a year :D) We chose this system, because it’s fairer to you. Let’s imagine that you stay 1,5 years at Tailwarden and you want to leave : you won’t leave with the right to 25% as in many other companies, but with the right to 35,4%.

<aside> 💰 To sum it up : after the cliff of the first year you get 25%, 50% after 2 years, 75% after 3 years, and 100% after 4 years. If you don’t stay full years, you need to make the calculation with the cliff after the first year, plus 2,08% for each extra month.

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You can exercise your stock warrants once they are vested, and there are typically two main scenarios for this :

• Departure from the company
  • Upon leaving the company, you have the right to purchase the stock warrants you have acquired over time (i.e., exercise your vested stock warrants). This means that you can buy shares at a predetermined price (”strike price”) that was set when you received the warrants. If the company’s stock price has increased since you received the warrants, you can buy the shares at a lower strike price and then sell them at the higher market price, making a profit. If you depart before 4 years, any unvested stock warrants will be forfeited. The expiration date—the duration during which you retain the right to convert stock warrants to shares and purchase a share of Tailwarden after your employment ends—is one year.
• Liquidity event
  • A liquidity event is when a specific event happens to a company that lets shareholders turn their stock option parts into money. This can happen when the company gets more money (fundraising), gets sold to another company, or starts selling its shares to the public (IPO). These events often result in an opportunity for shareholders to realise financial gains by selling their shares at a revised value or through the company's transition to a publicly traded entity. There are three types of liquidity events which are particularly interesting, as they result in an opportunity for shareholders to realise financial gains :
    • Fundraising event : whenever we raise funds, the value of the share grows. So if a fundraising occurs, theoretically you will be able to make a profit.
    • Sale of the company : if the company is sold, your stock warrants will vest fully, whatever your previous vesting period was.
    • IPO (Initial Public Offering) : this means a private company going public by sale of its stocks to the general public. There is typically a lock-up period of 6-12months in which you cannot trade, but after this you can exercise and trade your shares.

<aside> 💡 To finish on this topic, you don’t need to exercise all your vested warrants in the case of departure or liquidity event. You can choose to exercise only a portion.

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