Vesting Schedules

Timetables for stock grants and options mandating that entrepreneurs earn (vest) their equity stakes over a number of years. This format seeks to provide comfort to investors and the market that the entrepreneurs will stick around, rather than converting and cashing in their shares upon receipt.

For example, if stock and options vest over four years–it means that you have to be associated with the company for four years to own all of your stock or options. If you voluntarily leave the company before the four years are up, then a vesting formula applies and you only get a percentage of your stock.