Can vesting schedule apply to non-founding officers?


1

Can a vesting schedule be applied to a non-founding member of a corporation (eg. an officer, employee, etc)?

Incorporation Vesting

asked Aug 11 '12 at 04:15
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Dave
34 points

3 Answers


2

Yes. In this context it's typically not called vesting; that term is often associated with the shares granted to founders. The most common term for for the program that aplies for employees is stock options.

The underlying principle of vesting -- that shares aren't just transferred at the signing of contract, but divided into tranches and given over time -- should absolutely be considered when creating a salary plan.

Whatever it's called, this is complex, and the tax laws and corporate laws that apply to you and your employees matter a great deal. See for example this about RSU's, and the discussion under the stock options tag.

It is important that you obtain qualified legal counsel and tax counsel before you create a stock options program.

answered Aug 11 '12 at 08:16
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Jesper Mortensen
15,292 points

0

Yes, anyone getting stock and/or options can have the stock and/or options subject to vesting.

I typically see vesting over 4 years, with a one-year "cliff" (i.e., the first 25% of stock/options vests after one year), and the rest vest either monthly or quarterly over the remaining 3 years.

answered Aug 20 '12 at 03:41
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User6492
1,747 points

-1

I would add that founders equity sometimes opt for few/no vesting cliffs whereas officer/employee have regular cliffs (typically per year). To learn more about vesting cliffs, see: http://startuplawyer.com/incorporation/why-your-startups-founders-stock-should-vest-over-time

answered Aug 11 '12 at 09:09
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Henry The Hengineer
4,316 points

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Incorporation Vesting