Accelerated Vesting

Accelerated Vesting refers to a provision in employee benefit plans, particularly Stock option plans, that allows employees to gain full ownership of their benefits at an expedited rate under specific circumstances. This can occur in scenarios such as company mergers, acquisitions, or other significant corporate events.

For example, an employee with Stock Options that typically vest over four years may have their Options fully vested immediately if their company is acquired. This means that instead of waiting three more years, the employee can exercise all their Options right away.

Another case could involve a performance milestone. If a startup achieves a major funding round earlier than anticipated, the board might decide to accelerate vesting for all employees to reward them for their contributions and to incentivize retention.