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In stock compensation, a rollover occurs when stock options, restricted stock, and/or other equity grants issued to employees of an acquired company are converted in some way (or "rolled over") into the same type of grants in the buyer. Technically, this occurs through either an assumption or a substitution of the target company's outstanding stock grants. Usually the exchange ratio for the rollover is the same as that used to convert shares.
A rollover is opposed to a cashout, in which the acquiring company does not assume the target's stock grants and instead gives the employees payments equivalent to the value of the grants. For details, see the section M&A: Impact on this website.
Another type of rollover provision occurs in an employee stock purchase plan (ESPP) when unused funds from one offering or purchase period are rolled over into the next. A rollover in an ESPP can happen only in limited situations, as explained in an FAQ on this website.
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