Definition of Vesting Schedule

Vesting schedules delineate when an employee will get access to shares or stock options that have been reserved for them.
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Without a vesting schedule, employees would immediately get access to stock or grants and would have no incentive to stick around. As such, vesting schedules motivate employees to stay with the company.

A startup might, for example, have its employee stock options vest over four years on a quarterly basis. However, there is requirement that vesting be equal over time. So, another startup might vest 50% after one year and vest 25% in each of the following years.

Finally, there are often employment agreement terms that lead to immediate vesting. For example, in the event of a change of control, all employee stock options might vest.

Vesting Schedule References On This Site

These Gaebler.com articles mention this glossary term:

• How Much Money Should Company Founders Get? - When it comes to getting shares from the company's common stock, founders prefer to use a vesting schedule to determine who gets how much. According to the...
• How Equity Dilution Works - Odds are you don't get it all at once -- it's probably subject to a vesting schedule and it might only be stock options -- but that...
• How Much Money Should Company Founders Get? - When it comes to getting shares from the company's common stock, founders prefer to use a vesting schedule to determine who gets how much. According to the...
• How Equity Dilution Works - Odds are you don't get it all at once -- it's probably subject to a vesting schedule and it might only be stock options -- but that...