• definition

What is “Vesting”?

A period that an employee must wait in order to be liable for a certain asset (usually stocks). The employee rights are given over time or the Completing of certain events (that are determined by the company in a vesting schedule), which encourage the employee to perform well and to remain with the company. Once the vesting period is completed, the vested right is absolute. For example: Yossi is the founder of “Banana”. According to his contract with the company, Yossi will get 100 vested shares, regarding the vesting schedule Proposed below: First investment in the company, or 3 months from effective date of the contract (The early of the two) – 25%. Release to the public or 6 months from effective date of the contract (The early of the two) – 25% (50% in total). Revenues over 100,000$ or 9 months from effective date of the contract (The early of the two) – 25% (75% in total). One year from effective date of the contract (The early of the two) – 25% (100% in total). In case of selling the company to a third party – 100% of the shares will be vested.

By | 2016-11-04T16:56:10+00:00 October 15th, 2016|Legal Definitions|0 Comments

About the Author:

Karin Maimon
Law & Business (Accounting) student at the IDC Herzliya. Dreams of becoming an owner of a VC company that will connect between different markets around the world, focusing on innovation and technology.
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