Deferred Dividend Equivalents ( Clause Samples

The Deferred Dividend Equivalents clause establishes how dividend payments that would have been made on certain securities, such as stock options or restricted stock units, are handled if those dividends are not paid out immediately. Typically, this clause specifies that any dividends declared during the deferral period are tracked and either paid out or credited to the holder at a later date, often when the underlying security vests or is exercised. This mechanism ensures that recipients are not disadvantaged by the timing of dividend payments and maintains the economic value of their awards, addressing the issue of aligning incentive compensation with shareholder returns.