Windfall Shares

See: Windfall Profits.

Let’s set the stage here: there’s a mutual company, which is a private company that’s owned by its members. The owners are the clients—all very democratic sounding, eh? A credit union is a good example. Sometimes though, mutual companies decide to change the company structure—a process called “demutualization”—to one where the company is owned by shareholders. Demutualization can kind of be like a bittersweet breakup, giving some stuff up to get other stuff.

Windfall shares are given to these mutual company owner/clients as a parting goodie-bag, so to speak. They’re freebies, a gesture of goodwill, as a mutual company goes through the long and awkward process of demutualization. It’s like when a rich dad who’s never home buys his kid some ridiculously expensive toy (kind of).