Vesting conditions clause: Copy, customize, and use instantly
Introduction
A vesting conditions clause defines the terms under which certain rights or benefits, such as equity, stock options, or bonuses, become fully vested and cannot be forfeited. Vesting typically occurs over time, based on an employee's continued service or performance milestones. This clause ensures that the conditions for vesting are clearly outlined and helps align the interests of the company and its employees.
Below are templates for vesting conditions clauses tailored to different scenarios. Copy, customize, and insert them into your agreement.
Standard vesting conditions clause
This version provides a general framework for vesting conditions.
The vesting of [equity, stock options, or benefits] under this Agreement shall be subject to the following conditions: [X] percentage of the total [equity/options/benefits] shall vest upon the completion of [X] years of service with [Company Name], and the remaining [X]% shall vest in equal annual installments over the next [X] years, provided the employee remains employed by [Company Name] during such time.
Vesting conditions clause with time-based vesting schedule
This version outlines a time-based vesting schedule.
[Equity/Stock options/Benefits] granted under this Agreement shall vest according to the following time-based schedule: [X]% shall vest on the [X] anniversary of the employee's start date, and an additional [X]% shall vest on each subsequent anniversary, provided the employee continues to meet the service requirements.
Vesting conditions clause with performance-based vesting
This version ties vesting to performance.
The vesting of [equity/stock options/benefits] granted under this Agreement shall be contingent upon the achievement of specific performance milestones, as outlined in Schedule [X]. Each milestone, once achieved, will trigger the vesting of [X]% of the total [equity/options/benefits].
Vesting conditions clause with acceleration upon change of control
This version includes acceleration in the event of a change of control.
In the event of a change of control of [Company Name], any unvested [equity/options/benefits] granted to the employee will immediately vest in full, provided the employee remains employed with the company through the date of the change of control or is terminated within [X] months following the change.
Vesting conditions clause with cliff vesting
This version includes a cliff vesting period.
The [equity/stock options/benefits] granted under this Agreement shall vest according to a cliff vesting schedule. The employee will receive [X]% of the total [equity/options/benefits] after completing [X] years of service, with no vesting occurring before that time.
Vesting conditions clause with annual vesting
This clause specifies annual vesting.
The [equity/stock options/benefits] granted to the employee under this Agreement shall vest annually in equal installments over a period of [X] years. Each installment will vest on the anniversary of the employee’s start date, subject to the employee’s continued service with [Company Name].
Vesting conditions clause with immediate vesting upon retirement
This version includes immediate vesting upon retirement.
In the event the employee retires after [X] years of service with [Company Name], any unvested [equity/options/benefits] granted to the employee shall immediately vest in full, provided the employee is not terminated for cause prior to the retirement date.
Vesting conditions clause with continued service requirement
This clause links vesting to continued service.
The vesting of the [equity/stock options/benefits] granted under this Agreement is contingent upon the employee's continued service with [Company Name]. Vesting will occur on a [X]-year schedule, with the employee required to remain employed with the company to receive each vesting installment.
Vesting conditions clause with performance milestones and time-based vesting
This version combines performance and time-based conditions.
The vesting of [equity/stock options/benefits] under this Agreement will occur in two parts: [X]% will vest upon the achievement of specific performance milestones outlined in Schedule [X], and the remaining [X]% will vest over a period of [X] years, provided the employee remains employed by [Company Name].
Vesting conditions clause with termination for cause exclusion
This clause excludes vesting if terminated for cause.
In the event the employee is terminated for cause, any unvested [equity/options/benefits] granted under this Agreement shall immediately be forfeited. The employee will forfeit all rights to any unvested equity/options/benefits upon the date of termination.
Vesting conditions clause with partial acceleration upon termination without cause
This version includes partial acceleration upon termination without cause.
If the employee is terminated without cause, [X]% of any unvested [equity/options/benefits] shall immediately vest, with the remaining [X]% continuing to vest according to the original vesting schedule, provided the employee complies with the terms of this Agreement.
Vesting conditions clause with vesting tied to company performance
This version ties vesting to company performance.
The vesting of [equity/stock options/benefits] granted under this Agreement is contingent upon the achievement of certain company-wide performance targets, as outlined in Schedule [X]. The company must meet these targets for vesting to occur, and the employee will receive vested [equity/options/benefits] accordingly.
Vesting conditions clause with death or disability provisions
This clause includes provisions for death or disability.
In the event of the employee's death or permanent disability, any unvested [equity/options/benefits] granted under this Agreement shall immediately vest in full, and the employee’s legal representative or beneficiary shall be entitled to the vested benefits.
Vesting conditions clause with milestone vesting
This version uses specific milestones for vesting.
The vesting of the [equity/stock options/benefits] granted under this Agreement shall occur upon the achievement of specific milestones, including [Milestone 1], [Milestone 2], and [Milestone 3]. Each milestone, upon completion, will trigger the vesting of [X]% of the total [equity/options/benefits].
Vesting conditions clause with accelerated vesting upon termination due to death or disability
This version accelerates vesting upon death or disability.
If the employee’s employment terminates due to death or permanent disability, all unvested [equity/options/benefits] granted under this Agreement shall immediately vest in full, and the employee or their designated representative will receive the vested benefits.
Vesting conditions clause with clawback provisions
This clause includes clawback provisions.
If the employee is found to have breached the terms of this Agreement or engaged in fraudulent behavior, the company reserves the right to reclaim any vested [equity/options/benefits] provided to the employee under this Agreement, regardless of the vesting schedule.
Vesting conditions clause with extended vesting period for exceptional performance
This version includes an extended vesting period for exceptional performance.
The vesting of [equity/options/benefits] may be extended for an additional [X] years if the employee meets specific performance benchmarks outlined in Schedule [X], as determined by [Company Name]. The extended vesting schedule will apply solely to the portion of [equity/options/benefits] tied to performance.
Vesting conditions clause with prorated vesting for partial years of service
This clause provides prorated vesting for partial years.
If the employee leaves the company before completing a full year of service, their vested [equity/options/benefits] will be prorated based on the number of days worked during the year. The prorated amount will be calculated and awarded to the employee upon departure.
Vesting conditions clause with condition for no forfeiture of rights
This version ensures no forfeiture of rights in certain cases.
If the employee is unable to meet the vesting conditions due to circumstances outside their control, such as illness or family emergency, they will not forfeit their rights to the unvested [equity/options/benefits]. The company may provide an alternative timeline for vesting.
Vesting conditions clause with vesting based on service anniversary
This clause ties vesting to the employee's service anniversary.
The vesting of [equity/options/benefits] under this Agreement will occur annually on the employee’s service anniversary, with a fixed percentage of [X]% vesting on each anniversary date, provided the employee remains employed by [Company Name].
Vesting conditions clause with provision for voluntary resignation
This version includes conditions for voluntary resignation.
If the employee voluntarily resigns before meeting the required vesting conditions, any unvested [equity/options/benefits] shall be forfeited unless otherwise stated in the agreement. The employee will not retain any rights to unvested equity/options/benefits post-resignation.
Vesting conditions clause with partial vesting for early retirement
This clause includes provisions for early retirement.
In the event of early retirement, as defined by [Company Name]’s retirement policy, the employee may be entitled to partial vesting of [equity/options/benefits] based on the number of years of service completed, prorated accordingly to the vesting schedule.
Vesting conditions clause with requirement for continued employment
This version ties vesting to continued employment.
The employee’s right to vest in [equity/options/benefits] granted under this Agreement is contingent upon their continued employment with [Company Name] through each vesting date. Termination, whether voluntary or involuntary, will result in the forfeiture of any unvested equity/options/benefits.
Vesting conditions clause with milestone-based vesting tied to company performance
This version ties vesting to company performance milestones.
The vesting of the [equity/stock options/benefits] granted under this Agreement is contingent upon [Company Name] achieving specific performance milestones outlined in Schedule [X]. Upon completion of each milestone, [X]% of the total [equity/options/benefits] will vest.
Vesting conditions clause with vesting triggered by annual performance reviews
This clause ties vesting to annual performance evaluations.
The vesting of [equity/options/benefits] under this Agreement will be contingent upon the employee's performance, as evaluated during the annual performance review. Vesting will occur annually based on a satisfactory performance rating as determined by the company.
Vesting conditions clause with vesting based on completion of specific projects
This version links vesting to the completion of certain projects.
The vesting of [equity/options/benefits] is contingent upon the employee's successful completion of key projects, as outlined in Schedule [X]. Each project completion will trigger a [X]% vesting of the total [equity/options/benefits].
Vesting conditions clause with prorated vesting for part-time employees
This version addresses part-time employees.
Employees who work less than full-time will have their [equity/options/benefits] vested on a prorated basis, based on the number of hours worked in relation to full-time employment. The vesting schedule will be adjusted accordingly.
Vesting conditions clause with vesting for consultant agreements
This version applies to consultants.
The vesting of [equity/options/benefits] granted under this Agreement is contingent upon the consultant completing the agreed-upon consulting services, as outlined in Schedule [X]. Vesting will occur upon successful completion of each service milestone.
Vesting conditions clause with accelerated vesting upon mutual agreement
This clause allows for accelerated vesting by mutual consent.
[Company Name] and the employee may, by mutual agreement, accelerate the vesting of [equity/options/benefits] granted under this Agreement. Such acceleration will be documented in writing and signed by both parties.
Vesting conditions clause with requirement for no competing activities
This version ties vesting to no competing activities.
Vesting of the [equity/options/benefits] granted under this Agreement is contingent upon the employee refraining from engaging in competitive activities, as outlined in Section [X]. Any violation of this condition will result in the forfeiture of unvested [equity/options/benefits].
Vesting conditions clause with vesting linked to completion of professional development goals
This clause ties vesting to professional development.
The vesting of [equity/options/benefits] under this Agreement is contingent upon the employee completing specified professional development goals, such as certifications, courses, or training programs, as outlined in Schedule [X].
Vesting conditions clause with vesting based on retention after business sale
This version involves vesting tied to retention post-sale.
In the event of a sale of [Company Name] or its assets, any unvested [equity/options/benefits] granted to the employee shall vest immediately if the employee remains employed with the acquiring company for at least [X] months after the sale.
Vesting conditions clause with conditional vesting for new hires
This clause includes conditions for new hires.
For new hires, the vesting of [equity/options/benefits] granted under this Agreement is conditional upon the employee completing the probationary period of [X] months. Upon successful completion, the employee will begin to vest in the granted benefits.
Vesting conditions clause with provisions for employees who relocate
This version addresses relocation.
If the employee relocates to a new location as required by [Company Name], the vesting schedule for [equity/options/benefits] shall continue without interruption. However, if the employee voluntarily leaves the company within [X] months of relocation, any unvested benefits will be forfeited.
Vesting conditions clause with specific vesting for key executives
This version is tailored for key executives.
The vesting of [equity/options/benefits] granted to key executives under this Agreement shall occur in accordance with the executive’s performance and the achievement of specified company-wide goals. The vesting schedule for executives may differ from standard employee schedules.
Vesting conditions clause with vesting conditional upon corporate restructuring
This clause addresses corporate restructuring.
In the event of a corporate restructuring, [Company Name] may adjust the vesting conditions of the employee’s [equity/options/benefits] to align with the new company structure. The adjusted vesting schedule will be provided to the employee in writing.
Vesting conditions clause with provision for post-termination vesting for death or disability
This version includes death or disability provisions.
If the employee terminates employment due to death or permanent disability, any unvested [equity/options/benefits] shall vest immediately, and the employee’s estate or designated beneficiary will be entitled to the vested benefits.
Vesting conditions clause with provision for full vesting on retirement
This clause provides for full vesting upon retirement.
If the employee retires after reaching [X] years of service with [Company Name], all unvested [equity/options/benefits] shall vest immediately upon the employee’s retirement, provided the employee is not terminated for cause prior to the retirement date.
Vesting conditions clause with acceleration upon death or disability
This version accelerates vesting upon death or disability.
In the event of the employee’s death or permanent disability, all unvested [equity/options/benefits] granted under this Agreement shall vest immediately and be paid out to the employee or their designated beneficiary.
Vesting conditions clause with partial vesting for early retirement
This clause addresses partial vesting for early retirement.
In the case of early retirement, as defined by [Company Name], the employee will be entitled to a prorated portion of the vested [equity/options/benefits] based on the number of years of service completed before retirement.
Vesting conditions clause with provision for pro-rata vesting upon partial terminations
This clause addresses pro-rata vesting for partial terminations.
If the employee leaves the company after a partial termination, the unvested [equity/options/benefits] will vest on a pro-rata basis, based on the time the employee worked during the vesting period.
Vesting conditions clause with conditional vesting based on business milestones
This version links vesting to business milestones.
The vesting of [equity/options/benefits] granted under this Agreement is conditioned upon the achievement of business milestones, including [specific milestone goals]. Each milestone achieved will result in the vesting of [X]% of the granted [equity/options/benefits].
Vesting conditions clause with requirement for annual performance reviews
This version connects vesting to annual reviews.
The vesting of [equity/options/benefits] under this Agreement is contingent upon the employee achieving a satisfactory performance rating during the company’s annual performance review process. The vesting schedule will be reviewed annually based on performance.
Vesting conditions clause with provision for forfeiture due to misconduct
This version includes a forfeiture condition due to misconduct.
If the employee engages in misconduct or violates the terms of this Agreement, including breach of confidentiality, the employee’s unvested [equity/options/benefits] will be immediately forfeited, and no further vesting will occur.
Vesting conditions clause with condition for achieving specific department goals
This clause ties vesting to department goals.
The vesting of [equity/options/benefits] granted to the employee under this Agreement is contingent upon achieving specific department goals outlined in Schedule [X]. Each milestone will trigger a corresponding portion of the vesting schedule.
Vesting conditions clause with vesting tied to individual performance
This version connects vesting to individual performance.
Vesting of [equity/options/benefits] will be contingent upon the employee meeting specific performance targets set out in the individual performance plan, as determined by the company’s management. Failure to meet performance targets will result in a delay or forfeiture of vesting.
Vesting conditions clause with provision for vesting based on client retention
This clause ties vesting to client retention.
The vesting of [equity/options/benefits] is contingent upon the employee’s contribution to client retention or acquisition, as defined in the company’s client retention strategy. A percentage of the employee’s [equity/options/benefits] will vest after achieving key client retention targets.
Vesting conditions clause with condition for board approval
This version includes board approval.
The vesting of [equity/options/benefits] granted under this Agreement is subject to the approval of the board of directors. Vesting will occur in accordance with the schedule outlined in Section [X], contingent upon board approval of the employee’s continued performance and contributions.
Vesting conditions clause with vesting contingent on service in key roles
This version ties vesting to service in key roles.
The employee’s [equity/options/benefits] will vest only if the employee serves in a key role, as defined by the company, for a period of [X] years. If the employee transitions to a non-key role before completing the vesting period, any unvested benefits will be forfeited.
Vesting conditions clause with no vesting for voluntary resignation
This clause excludes vesting for voluntary resignation.
In the event of the employee’s voluntary resignation before completing the vesting period, all unvested [equity/options/benefits] will be forfeited. The employee will not be entitled to any further vesting after their resignation date.
Vesting conditions clause with provision for automatic vesting upon merger
This version includes automatic vesting upon merger.
In the event of a merger or acquisition of [Company Name], any unvested [equity/options/benefits] granted under this Agreement shall vest immediately upon the effective date of the merger, and the employee will be entitled to all vested benefits, subject to the terms of the merger agreement.
Vesting conditions clause with gradual vesting schedule over five years
This version outlines a gradual five-year vesting schedule.
The vesting of [equity/options/benefits] will occur over a period of five years, with [X]% of the total [equity/options/benefits] vesting each year, contingent upon the employee’s continued service with [Company Name] throughout the vesting period.
Vesting conditions clause with performance review-based vesting
This clause includes performance review-based vesting.
The employee’s [equity/options/benefits] will vest based on the outcome of their annual performance review. A successful review will result in the vesting of [X]% of the granted [equity/options/benefits], while an unsatisfactory review will delay or forfeit vesting.
Vesting conditions clause with provision for deferred vesting in case of leave of absence
This version allows deferred vesting for leave of absence.
If the employee takes an extended leave of absence, the vesting schedule for any [equity/options/benefits] will be deferred for the length of the leave, with the vesting schedule resuming upon the employee’s return to full-time employment.
Vesting conditions clause with specific milestones for executive vesting
This version is tailored for executives.
The vesting of [equity/options/benefits] for executives is contingent upon the achievement of both individual and corporate milestones. These milestones include revenue targets, market share growth, and operational efficiency improvements, as outlined in Schedule [X].
Vesting conditions clause with provision for vesting based on leadership roles
This version ties vesting to leadership roles.
[Equity/options/benefits] granted under this Agreement shall vest only if the employee is serving in a leadership role, as defined by [Company Name], for a period of [X] years. If the employee transitions to a non-leadership role, vesting will cease, and unvested benefits will be forfeited.
Vesting conditions clause with provision for vesting upon termination without cause
This clause provides for vesting upon termination without cause.
In the event of termination without cause, [X]% of the employee’s unvested [equity/options/benefits] shall immediately vest, and the employee will receive the vested benefits, in addition to any severance or compensation due under this Agreement.
Vesting conditions clause with provision for forfeiture due to breach of non-compete
This version includes forfeiture due to a non-compete breach.
If the employee violates the non-compete provisions of this Agreement, all unvested [equity/options/benefits] granted under this Agreement shall be forfeited, and no further vesting will occur from the date of the breach.
Vesting conditions clause with vesting tied to sales targets
This version ties vesting to sales performance.
The vesting of [equity/options/benefits] granted to the employee is contingent upon achieving specific sales targets, as outlined in Schedule [X]. A portion of the [equity/options/benefits] will vest upon reaching each target, with the remaining portion vesting upon the final goal.
Vesting conditions clause with provision for vesting based on organizational growth
This clause ties vesting to organizational growth.
The vesting of [equity/options/benefits] will be based on [Company Name] achieving specific growth targets, such as expanding into new markets or increasing annual revenue by [X]%. Each growth milestone achieved will trigger the vesting of [X]% of the total [equity/options/benefits].
Vesting conditions clause with provision for partial vesting for contractors
This version applies to contractors.
For contractors, the vesting of [equity/options/benefits] will occur on a prorated basis, depending on the duration of their contract and the completion of specified deliverables. Vesting will be based on a schedule outlined in Section [X], with prorated benefits for partial service.
Vesting conditions clause with tiered vesting for high-level positions
This clause includes tiered vesting for senior positions.
The vesting of [equity/options/benefits] for senior executives will occur according to a tiered schedule, with a larger portion of the [equity/options/benefits] vesting after the completion of [X] years of service, reflecting the employee’s higher level of responsibility within the company.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.