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Garden Leave

A period in which a company pays an employee to refrain from working (i.e. supposedly to relax in the garden at home instead). Garden leave (sometimes gardening leave) is typically imposed to prevent the employee from having any further influence on the organization or from acting to benefit a competitor before officially ending employment.

For equity awards, stock plan documents do not necessarily specify whether vesting continues during garden leave or, for stock options, whether the onset of garden leave starts the post-termination exercise period. Vagueness on these points in the plan can open this type of leave to disputes. If the related stock plan provisions stop vesting when active service is no longer provided to the company and consider this nonactivity a termination, any challenge that vesting should continue during garden leave will probably be defeated.

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