proportionate redemption(redirected from Proportionate Redemptions)
A way of conducting a management buyback in which a stockholder maintains the same percentage of ownership in the company that he/she had before the buyback. A management buyback is the act of a company buying its own shares to reduce the number of shares outstanding; a proportionate redemption exists in order to protect stockholders from the risk of loss in the buyback. For example, if a stockholder owned 4% of the company before the buyback, the company will structure the buyback such that he/she continues to own 4% after the buyback.
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A partial stock buyback in which a stockholder maintains the same ownership percentage after selling a portion of his or her shares back to the issuer.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.