Startup Terms Glossary
What is Vested?
The term “vested” refers to the process required in order to accrue ownership of a security. Vesting usually indicates that a startup employee must play an active role in the company for a pre-determined amount of time before they fully own the options offered to them as a condition of employment. This helps ensure that shareholders who walk away from the company aren’t able to bring large amounts of ownership with them unless it was earned.
Vested Examples
Examples of vested:
- Example 1. Tatiana works for a startup company that requires her to be vested in her options before she is entitled to the full value. In her company, she would be considered fully vested at four years employment. So, her first year, she is entitled to 25% of her stock package, year two 50%, year three 75%. During year four, she would be considered fully vested and thus is entitled to 100% of the value of her stock package.
Here’s another web page about vested.
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