Add a GOOD_REASON termination reason

[JSv4]

Per issue #56, importing comments / suggestions to our static Google Doc into GitHub for discussion

@ashawber proposed we add a GOOD REASON enum to Termination Window type's reason field's enumerated reasons:

Open-Cap-Format-OCF/schema/enums/TerminationWindowType.schema.json

Lines 1 to 15 in 9edd343

	{
	"$schema": "http://json-schema.org/draft-07/schema",
	"$id": "https://opencaptablecoalition.com/schema/enums/TerminationWindowType.schema.json",
	"title": "Enum - Termination Window Type",
	"description": "Enumeration of termination window types",
	"type": "string",
	"enum": [
	"CAUSE",
	"VOLUNTARY",
	"INVOLUNTARY",
	"DEATH",
	"DISABILITY",
	"RETIREMENT"
	]
	}

@ashawber, are you proposing we add another reason type called GOOD_REASON, and, if so, could we roll it under CAUSE?

[ashawber]

Yeah I think we need another reason type for Good Reason. It can be rolled under "Voluntary" because it is a subtype of Voluntary termination.

Side note: Cause is a subtype of Involuntary termination.

[JSv4]

Question here - what is ultimately driving these different enumerations? Are these based purely on convention, or does this stem from some of the applicable SEC regs here? Would be helpful to get a complete breakdown of what needs to be covered here. @ashawber, are you able to add some color here?

[ashawber]

The “Cause” and “Good Reason” enumerations are relevant for the vesting of stock options, in particular acceleration of stock options upon a change of control. Knowing the circumstances upon which an option holder was terminated will often determine whether any vesting acceleration is triggered. These things are creatures of the contractual conventions around employee equity arrangements, which are often negotiated when an exec is hired. Also, if an employee is terminated for “Cause,” then their vested options immediately terminate and are no longer exercisable. This is how most stock plans are set up to prevent bad actors from being able to exercise their vested options. Again, this is a contractual convention that is part of most stock plans. On Mar 29, 2022, at 9:58 AM, JSIV ***@***.***> wrote:  Question here - what is ultimately driving these different enumerations? Are these based purely on convention, or does this stem from some of the applicable SEC regs here? Would be helpful to get a complete breakdown of what needs to be covered here. @ashawber<https://urldefense.com/v3/__https://github.com/ashawber__;!!K_R5ZAeIjLw!UXREHOUUqxbhh0WVPqH6nooyZmmshqq1bwCiIOMCCLSl207gPylqLDw2sR89qtqTFuc$>, are you able to add some color here? — Reply to this email directly, view it on GitHub<https://urldefense.com/v3/__https://github.com/Open-Cap-Table-Coalition/Open-Cap-Format-OCF/discussions/145*discussioncomment-2463464__;Iw!!K_R5ZAeIjLw!UXREHOUUqxbhh0WVPqH6nooyZmmshqq1bwCiIOMCCLSl207gPylqLDw2sR89tWbrVsU$>, or unsubscribe<https://urldefense.com/v3/__https://github.com/notifications/unsubscribe-auth/AX5MIGVBXCJ55UV5HU4OHELVCMZEHANCNFSM5R4EFUVA__;!!K_R5ZAeIjLw!UXREHOUUqxbhh0WVPqH6nooyZmmshqq1bwCiIOMCCLSl207gPylqLDw2sR89CnkEDW8$>. You are receiving this because you were mentioned.Message ID: ***@***.***>

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[JSv4]

@ashawber, the original enumeration here, if I'm remembering correctly, was based on what the respective vendor platforms supported. We're open to tweaking the list, but, if we do so, we want to make sure it doesn't just add more options to pick from that people could be confused about. I want to make sure we have clarity about the distinctions between the options and the hierarchy (e.g. Cause is a subtype of involuntary - so do we track both? Do we only track the ultimate child type - i.e. Cause)?

Since this is based on the underlying SOPs, I think it would be great to get the proposed Standards Working Group to weigh in on what the "right" enumerations should be before making changes here (you should have just got an invite from David @ WSGR). That said, if you think we absolutely must change what's here before release because something critical is missing, mind taking a stab at what you think the enumeration should be for release?

[ashawber]

The original enumerations are much more confusing, actually, because there is overlap between them (e.g. Retirement is a subtype of Voluntary, and Cause is a subtype of Involuntary) The enumerations should break down like this, which represent the various ways that a service provider can be terminated. It’s just two main types (Voluntary and Involuntary) and their respective sub-types: 1. Voluntary: * Retirement * Good Reason * Other Voluntary (e.g. termination by the employee for a reason other than Retirement or “Good Reason”) 2. Involuntary: * Cause * Death * Disability * Other Involuntary (e.g. termination by the Company without Cause, and no Death or Disability) Doing it this way allows the user to specify the circumstances under which a service provider terminated their relationship with the Company and eliminates any confusion. Andy Shawber | Perkins Coie LLP SENIOR INNOVATION COUNSEL D. +1.206.359.3896 (rings through to cell) E. ***@***.******@***.***> From: JSIV ***@***.***> Sent: Friday, April 8, 2022 2:24 PM To: Open-Cap-Table-Coalition/Open-Cap-Format-OCF ***@***.***> Cc: Shawber, Andrew (Andy) (SEA) ***@***.***>; Mention ***@***.***> Subject: Re: [Open-Cap-Table-Coalition/Open-Cap-Format-OCF] Add a `GOOD_REASON` termination reason (Discussion #145) @ashawber<https://urldefense.com/v3/__https:/github.com/ashawber__;!!K_R5ZAeIjLw!SeWIyRIgT-MfHq6gyHOtctPIsRRth7G2TDViGHHUXGiXs7QrH5e9D-jlzuCvDS5lOkk$>, the original enumeration here, if I'm remembering correctly, was based on what the respective vendor platforms supported. We're open to tweaking the list, but, if we do so, we want to make sure it doesn't just add more options to pick from that people could be confused about. I want to make sure we have clarity about the distinctions between the options and the hierarchy (e.g. Cause is a subtype of involuntary - so do we track both? Do we only track the ultimate child type - i.e. Cause)? Since this is based on the underlying SOPs, I think it would be great to get the proposed Standards Working Group to weigh in on what the "right" enumerations should be before making changes here (you should have just got an invite from David @ WSGR). That said, if you think we absolutely must change what's here before release because something critical is missing, mind taking a stab at what you think the enumeration should be for release? — Reply to this email directly, view it on GitHub<https://urldefense.com/v3/__https:/github.com/Open-Cap-Table-Coalition/Open-Cap-Format-OCF/discussions/145*discussioncomment-2533617__;Iw!!K_R5ZAeIjLw!SeWIyRIgT-MfHq6gyHOtctPIsRRth7G2TDViGHHUXGiXs7QrH5e9D-jlzuCvt4hZzfk$>, or unsubscribe<https://urldefense.com/v3/__https:/github.com/notifications/unsubscribe-auth/AX5MIGQOS7QYNWHYG7AXN3DVECPXTANCNFSM5R4EFUVA__;!!K_R5ZAeIjLw!SeWIyRIgT-MfHq6gyHOtctPIsRRth7G2TDViGHHUXGiXs7QrH5e9D-jlzuCvHYh_bxw$>. You are receiving this because you were mentioned.Message ID: ***@***.******@***.***>>

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[JSv4]

Thanks @ashawber. This makes sense to me. @Open-Cap-Table-Coalition/twg, any thoughts on this proposal?

[tmccnnll]

I have a few thoughts and questions about this.

• Instead of GOOD_REASON, as is being proposed, what if we used GOOD_CAUSE, which seems to be a widely used terminology across many US states (for example)?
• Should we change CAUSE, a sub-variation of INVOLUNTARY, to WITH_CAUSE to be more explicit/verbose?
• Do we want to maintain a generic VOLUNTARY and INVOLUNTARY enum member while also supporting the more specific sub-variations of those members?
  • This could support the "other" category instead of us having to constantly update this enum
• Semi-related to the above, should we prefix all of the sub-variations of the VOLUNTARY and INVOLUNTARY enum members with those two words to better show their relationships?

Taking the four bullet points into account, you would end up with:

"enum": [ 
     "VOLUNTARY",
     "VOLUNTARY_GOOD_CAUSE",
     "VOLUNTARY_RETIREMENT",
     "INVOLUNTARY", 
     "INVOLUNTARY_DEATH", 
     "INVOLUNTARY_DISABILITY", 
     "INVOLUNTARY_WITH_CAUSE",
   ] 

[JSv4]

From the TWG Call on 4/12/22:

We didn't want to have involuntary and voluntary top-level choices as we were worried people would default to those and omit additional detail they might and which would be helpful. Let's make them voluntary_other and involuntary_other to reflect that this isn't meant to be a hierarchy.

So, for completeness' sake, this would be the enum:

"enum": [ 
     "VOLUNTARY_OTHER",
     "VOLUNTARY_GOOD_CAUSE",
     "VOLUNTARY_RETIREMENT",
     "INVOLUNTARY_OTHER", 
     "INVOLUNTARY_DEATH", 
     "INVOLUNTARY_DISABILITY", 
     "INVOLUNTARY_WITH_CAUSE",
   ]