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Where do the other 50 shares go? Is the government holding billions of dollars worth of shares in private companies? Or do they immediately put them on the market? Seems like that might distort the price.

It's called "sell to cover": All the shares vest, then a number of them are automatically sold on the open market and the proceeds are withheld to cover the income tax liability.

It's often possible to choose between doing that or keeping all the shares and paying the tax liability out of your salary.

Presumably this structure means the company pays the tax to the government, and are, in essence, buying back their own shares :)

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