What is vesting in the context of employee stock options?

Vesting refers to the process by which employees earn the right to employer-provided assets, such as stock options, over a period of time. It outlines the duration an employee must remain with the company to fully own the granted options.

Vesting typically follows a predetermined schedule, often spanning several years. For example, a 5-year vesting period means that over the course of five years, an employee gradually gains ownership of the granted stock options until they are fully vested.

The vesting schedule for stock options should be outlined in your employment contract or equity plan documentation provided by your employer.

If the terms are unclear or you require further clarification, it’s advisable to consult with your employer or human resources department for detailed information regarding the vesting schedule, including intervals, cliffs, and any performance-based criteria.

All FAQs Published at: 2024-03-24