Vesting schedule clause: Copy, customize, and use instantly
Introduction
A vesting schedule clause outlines the terms under which equity or other benefits granted to an individual become fully owned or earned over time. This clause is critical in aligning incentives, retaining key personnel, and ensuring that benefits are distributed fairly. It defines the timeline, conditions, and events that affect the vesting process.
Below are templates for vesting schedule clauses tailored to different scenarios. Copy, customize, and insert them into your agreement.
Standard vesting schedule clause
This variation applies to agreements with a typical time-based vesting structure.
The equity granted under this Agreement shall vest over a period of [specific duration, e.g., four years] with a [specific number]-month cliff. Vesting shall occur monthly in equal installments beginning on the [specific date] until fully vested, provided the recipient remains in continuous service with the Company.
Accelerated vesting clause
This variation applies to agreements allowing for accelerated vesting upon specific events.
In the event of a merger, acquisition, or other change of control, any unvested equity shall immediately vest in full as of the closing date of such transaction. This acceleration is subject to the recipient’s continuous service with the Company through the closing date.
Milestone-based vesting schedule clause
This variation applies to agreements where vesting is tied to performance milestones.
The equity granted under this Agreement shall vest upon the achievement of the following milestones: [specific milestones, e.g., project completion, revenue targets]. Vesting shall be contingent on the milestones being verified and approved by the Company’s Board of Directors.
Hybrid vesting schedule clause
This variation applies to agreements combining time-based and performance-based vesting.
The equity granted under this Agreement shall vest as follows: [percentage]% shall vest over a period of [specific duration, e.g., three years] on a time-based schedule, and the remaining [percentage]% shall vest upon the achievement of [specific milestones]. Both time-based and milestone-based vesting require continuous service with the Company.
Partial accelerated vesting clause
This variation applies to agreements offering partial acceleration under certain conditions.
In the event of a termination without cause or resignation for good reason, [percentage]% of the unvested equity shall immediately vest. The remaining equity shall be forfeited unless otherwise agreed in writing by the Company.
Graded vesting schedule clause
This variation applies to agreements with a graded vesting structure.
The equity granted under this Agreement shall vest in increments of [specific percentage, e.g., 25%] per year over a period of [specific duration, e.g., four years]. Vesting shall occur annually on the anniversary of the grant date, provided the recipient remains in continuous service with the Company.
Double-trigger accelerated vesting clause
This variation applies to agreements requiring two specific events for acceleration.
Any unvested equity shall immediately vest if (i) a change of control occurs, and (ii) the recipient’s employment is terminated without cause or the recipient resigns for good reason within [specific number] months following the change of control.
Vesting schedule for restricted stock clause
This variation applies to agreements involving restricted stock.
The restricted stock granted under this Agreement shall vest over a [specific duration, e.g., three-year] period, with [specific percentage] vesting on the first anniversary of the grant date and the remaining [specific percentage] vesting equally each year thereafter. Vesting is subject to the recipient’s continuous employment with the Company.
Vesting pause clause
This variation applies to agreements where vesting may be paused under specific circumstances.
In the event the recipient takes an approved leave of absence exceeding [specific duration], the vesting schedule shall be paused for the duration of the leave. Vesting shall resume upon the recipient’s return to active service with the Company.
Vesting forfeiture clause
This variation applies to agreements specifying forfeiture conditions.
Any unvested equity under this Agreement shall be immediately forfeited if the recipient’s employment is terminated for cause or if the recipient violates any terms of this Agreement or the Company’s policies.
Cliff-only vesting schedule clause
This variation applies to agreements with a single vesting event.
The equity granted under this Agreement shall vest in full on the [specific number]-month anniversary of the grant date, provided the recipient remains in continuous service with the Company through such date.
Vesting schedule adjustment clause
This variation applies to agreements allowing adjustments under specific circumstances.
The vesting schedule outlined in this Agreement may be adjusted by the Board of Directors to account for significant changes in the recipient’s role, performance, or the Company’s strategic needs. Any adjustments shall be communicated in writing.
Annual performance-based vesting clause
This variation applies to agreements tying vesting to annual performance reviews.
The equity granted under this Agreement shall vest annually, contingent on the recipient meeting specific performance goals as determined by the Company’s annual performance review process. Vesting percentages shall be determined based on the achievement of those goals.
Vesting schedule for board members clause
This variation applies to agreements for non-employee board members.
The equity granted to board members under this Agreement shall vest in equal quarterly installments over a [specific duration, e.g., two-year] period, beginning on the grant date and contingent on continued service as a member of the Board of Directors.
Partial forfeiture vesting clause
This variation applies to agreements allowing partial vesting under specific conditions.
If the recipient’s employment is terminated without cause or due to disability, [specific percentage]% of unvested equity shall vest immediately, while the remainder shall be forfeited.
Vesting deferral clause
This variation applies to agreements allowing vesting to be deferred.
The recipient may elect to defer the vesting of equity granted under this Agreement to a future date by providing written notice to the Company at least [specific number] days prior to the scheduled vesting date. Deferred vesting must comply with applicable laws and Company policies.
Performance clawback vesting clause
This variation applies to agreements allowing equity clawbacks for underperformance.
If the recipient fails to meet specific performance metrics outlined in this Agreement, the Company reserves the right to claw back unvested equity. Clawbacks shall be determined by the Board of Directors and communicated in writing to the recipient.
Graduated cliff vesting schedule clause
This variation applies to agreements combining cliffs with graduated vesting.
The equity granted under this Agreement shall be subject to a [specific number]-month cliff, after which [specific percentage] shall vest immediately. The remaining equity shall vest in equal monthly installments over the next [specific duration, e.g., three years].
Vesting suspension for misconduct clause
This variation applies to agreements allowing vesting suspension for investigations.
If the recipient is under investigation for alleged misconduct, the Company may suspend vesting of equity under this Agreement until the investigation is resolved. Any unvested equity may be forfeited if misconduct is confirmed.
Vesting redemption clause
This variation applies to agreements involving equity redemption rights.
Upon the recipient’s voluntary resignation or termination for cause, the Company reserves the right to redeem any unvested equity under this Agreement at a predetermined fair market value.
Accelerated vesting for retirement clause
This variation applies to agreements allowing acceleration for retirement.
If the recipient retires after [specific number] years of continuous service and is at least [specific age], any unvested equity under this Agreement shall immediately vest in full, subject to the terms outlined herein.
Vesting schedule for consultants clause
This variation applies to agreements involving non-employee consultants.
The equity granted to the consultant under this Agreement shall vest in equal monthly installments over a [specific duration, e.g., two years] period, provided the consultant continues to fulfill their contractual obligations to the Company.
Reverse vesting schedule clause
This variation applies to agreements involving reverse vesting structures.
The equity granted under this Agreement shall be fully vested on the grant date, but shall be subject to reverse vesting conditions. If the recipient fails to fulfill their service obligations, the Company may repurchase unvested equity at the original grant price.
Time-based vesting with exit acceleration clause
This variation applies to agreements granting acceleration upon company exit.
The equity granted under this Agreement shall vest on a time-based schedule over [specific duration], with any remaining unvested equity immediately vesting upon the occurrence of a Company exit event, such as a merger, acquisition, or public offering.
Continuous service requirement vesting clause
This variation applies to agreements requiring uninterrupted service for vesting.
The equity granted under this Agreement shall vest only if the recipient remains in continuous service with the Company. Any interruptions in service exceeding [specific number] days without prior written approval shall result in forfeiture of unvested equity.
Vesting schedule for dividends clause
This variation applies to agreements involving dividend eligibility.
The recipient shall be eligible to receive dividends on vested equity only. Unvested equity shall not accrue dividends until fully vested in accordance with the schedule outlined in this Agreement.
Equity conversion vesting clause
This variation applies to agreements where equity converts upon vesting.
The equity granted under this Agreement shall convert into [specific type, e.g., common shares] upon vesting. The conversion shall occur automatically on the vesting date, subject to compliance with applicable laws and the terms of this Agreement.
Monthly pro-rata vesting clause
This variation applies to agreements with a monthly vesting structure.
The equity granted under this Agreement shall vest pro-rata on a monthly basis over [specific duration, e.g., 24 months], beginning on the grant date. Vesting is contingent on the recipient’s continuous service with the Company.
Immediate vesting upon death clause
This variation applies to agreements granting acceleration upon the recipient’s death.
In the event of the recipient’s death, all unvested equity shall immediately vest in full and be transferred to the recipient’s designated beneficiaries or estate, in accordance with applicable laws.
Partial milestone-based vesting clause
This variation applies to agreements combining milestone and time-based vesting.
[Specific percentage] of the equity granted under this Agreement shall vest upon achieving [specific milestone], while the remaining [specific percentage] shall vest in equal monthly installments over [specific duration].
Service transition vesting clause
This variation applies to agreements involving a transition in roles.
If the recipient transitions to a new role within the Company, the vesting schedule shall continue uninterrupted, provided the recipient maintains continuous service. Any modifications to the vesting terms shall be documented in an addendum to this Agreement.
Vesting schedule for relocation clause
This variation applies to agreements involving geographic relocation.
The equity granted under this Agreement shall vest as scheduled, provided the recipient fulfills their obligation to relocate to [specific location] by [specific date]. Failure to relocate may result in forfeiture of unvested equity.
Equity clawback for competition clause
This variation applies to agreements involving non-compete provisions.
If the recipient engages in competitive activities with the Company during or within [specific duration] following their tenure, the Company reserves the right to claw back any vested equity granted under this Agreement.
Market event-based vesting clause
This variation applies to agreements tied to external market events.
The equity granted under this Agreement shall vest in full upon the occurrence of [specific market event, e.g., initial public offering or stock reaching a specific price]. This vesting is contingent on the recipient’s continuous service until the event date.
Deferred vesting for sabbaticals clause
This variation applies to agreements allowing sabbatical-related deferrals.
If the recipient takes an approved sabbatical, the vesting schedule shall be deferred for the duration of the sabbatical. Vesting shall resume upon the recipient’s return to active service with the Company.
Vesting schedule for part-time roles clause
This variation applies to agreements for part-time employees.
The equity granted under this Agreement shall vest proportionally based on the recipient’s part-time schedule. Vesting percentages shall be adjusted in alignment with the recipient’s hours worked relative to a full-time schedule.
Vesting with special committee approval clause
This variation applies to agreements requiring approval for vesting acceleration.
Any acceleration of the vesting schedule under this Agreement shall require the approval of the Compensation Committee. Such approval must be documented in writing and aligned with the Company’s governance policies.
Special grant vesting clause
This variation applies to agreements granting additional equity with separate terms.
Any additional equity granted under this Agreement as a special grant shall vest on terms distinct from the original equity award. The specific vesting schedule for the special grant shall be outlined in an addendum to this Agreement.
Vesting restriction for misconduct clause
This variation applies to agreements imposing restrictions for misconduct.
If the recipient is found to have engaged in misconduct as defined by the Company’s policies, all unvested equity under this Agreement shall be immediately forfeited. The Company reserves the right to reclaim any benefits received from vested equity.
Spousal consent vesting clause
This variation applies to agreements requiring spousal acknowledgment.
The recipient’s spouse must provide written acknowledgment of the terms of this Agreement, including the vesting schedule, to ensure compliance with applicable marital property laws. Failure to obtain consent may delay vesting.
Extended cliff vesting schedule clause
This variation applies to agreements with a longer cliff period.
The equity granted under this Agreement shall be subject to a [specific number]-month cliff, with no vesting occurring during that period. After the cliff, [specific percentage] shall vest monthly over the remaining [specific duration].
Vesting rollover clause
This variation applies to agreements involving equity rollover during corporate restructuring.
In the event of a corporate restructuring, the recipient’s unvested equity shall roll over into a new equity award with an equivalent value and vesting schedule, subject to the terms of the successor entity’s equity plan.
Continuous improvement vesting clause
This variation applies to agreements incentivizing ongoing improvements.
The equity granted under this Agreement shall vest based on the recipient’s contribution to continuous improvement initiatives. Metrics for contribution shall be established annually and reviewed by the Board of Directors.
Vesting schedule with escrow clause
This variation applies to agreements involving escrowed equity.
The equity granted under this Agreement shall be held in escrow until fully vested. Upon reaching the vesting milestones outlined herein, the equity shall be released from escrow to the recipient.
Dynamic vesting schedule clause
This variation applies to agreements with adjustable vesting schedules.
The vesting schedule for equity granted under this Agreement may be adjusted annually based on the recipient’s performance, organizational needs, or changes in role. Adjustments shall require approval from the Board of Directors.
Equity forfeiture upon resignation clause
This variation applies to agreements emphasizing equity forfeiture.
Any unvested equity under this Agreement shall be forfeited immediately if the recipient voluntarily resigns from their position before the completion of the vesting schedule.
Retirement-triggered vesting clause
This variation applies to agreements accelerating vesting upon retirement.
If the recipient retires in good standing after [specific number] years of service and at or beyond the age of [specific age], any remaining unvested equity under this Agreement shall fully vest on the retirement date.
Vesting based on revenue milestones clause
This variation applies to agreements tied to financial performance.
The equity granted under this Agreement shall vest upon the achievement of specific revenue milestones, including [specific targets]. Vesting shall be verified and approved by the Company’s finance department.
Vesting with service contract renewal clause
This variation applies to agreements tied to contract extensions.
The equity granted under this Agreement shall continue to vest only if the recipient renews their service contract with the Company prior to its expiration. Failure to renew shall result in the forfeiture of unvested equity.
Vesting schedule for academic collaborators clause
This variation applies to agreements involving academic partnerships.
The equity granted under this Agreement shall vest in equal annual installments over [specific duration, e.g., three years], contingent on the recipient’s continued collaboration with the Company under the academic partnership program.
Fractional vesting for partial years clause
This variation applies to agreements calculating fractional vesting.
For any partial years of service, equity under this Agreement shall vest on a pro-rata basis, calculated monthly. Vesting credits for partial months shall not be provided unless the service exceeds 15 days in that month.
Vesting schedule for deferred compensation clause
This variation applies to agreements involving deferred compensation.
The equity granted as part of the recipient’s deferred compensation package shall vest in accordance with the schedule outlined in this Agreement, with initial vesting commencing on [specific date].
Vesting pause during probationary period clause
This variation applies to agreements involving a probationary period.
The vesting schedule under this Agreement shall be paused during the recipient’s probationary period of [specific duration]. Vesting shall commence upon successful completion of the probationary period.
Country-specific vesting schedule clause
This variation applies to agreements involving international employees.
The vesting schedule under this Agreement shall comply with local labor and tax laws applicable to the recipient’s country of residence. Any required adjustments to the vesting terms shall be communicated in writing.
Anti-dilution vesting clause
This variation applies to agreements protecting against equity dilution.
The equity granted under this Agreement shall include anti-dilution protections, ensuring that the recipient’s vested and unvested shares are adjusted proportionally in the event of stock splits, mergers, or additional issuances.
Continuous learning vesting clause
This variation applies to agreements incentivizing professional development.
The equity granted under this Agreement shall vest partially each year, contingent on the recipient completing specific training or certification programs approved by the Company.
Vesting schedule for joint ventures clause
This variation applies to agreements involving joint ventures.
The equity granted under this Agreement shall vest upon the achievement of milestones specific to the joint venture’s performance, including [specific objectives]. Vesting shall require verification from both venture partners.
Vesting acceleration for IPO clause
This variation applies to agreements tied to an initial public offering.
In the event the Company completes an initial public offering, any unvested equity under this Agreement shall immediately vest in full on the IPO date, provided the recipient remains in service at that time.
Termination-triggered vesting clause
This variation applies to agreements defining vesting upon termination.
In the event of termination without cause, [specific percentage]% of the unvested equity under this Agreement shall immediately vest. Termination for cause shall result in the forfeiture of all unvested equity.
Vesting schedule with clawback for poor performance clause
This variation applies to agreements enabling clawbacks for underperformance.
If the recipient’s performance does not meet the minimum standards defined by the Company’s evaluation criteria, the Company reserves the right to claw back any equity that has vested in the previous [specific period, e.g., 12 months].
Vesting linked to product launch clause
This variation applies to agreements involving specific deliverables.
The equity granted under this Agreement shall vest upon the successful launch of [specific product or service]. The Board of Directors shall determine whether the product launch meets the success criteria for vesting.
Vesting with voluntary deferral clause
This variation applies to agreements allowing voluntary deferral of equity.
The recipient may elect to defer the vesting of equity under this Agreement by providing written notice to the Company at least [specific number] days before the scheduled vesting date. Deferred equity must comply with applicable tax regulations.
Vesting linked to customer acquisition targets clause
This variation applies to agreements tied to customer growth.
The equity granted under this Agreement shall vest upon the achievement of customer acquisition targets, such as reaching [specific number] new customers within [specific time frame]. Progress shall be verified by the sales department.
Conditional vesting for key partnerships clause
This variation applies to agreements contingent on securing partnerships.
The equity granted under this Agreement shall vest in full if the recipient successfully secures a partnership with [specific partner] or achieves equivalent strategic goals approved by the Board of Directors.
Vesting schedule for shared ownership clause
This variation applies to agreements involving shared equity ownership.
The equity granted under this Agreement shall vest equally among all eligible recipients in the shared ownership pool, with each participant’s vesting subject to their individual service agreements.
Equity escrow with performance-based release clause
This variation applies to agreements requiring escrowed equity linked to performance.
All equity under this Agreement shall be held in escrow and released in tranches upon the recipient meeting specific performance goals, such as [specific milestones]. The release schedule shall be reviewed annually.
No partial vesting clause
This variation applies to agreements prohibiting partial vesting.
The equity granted under this Agreement shall vest only in full increments based on the schedule outlined herein. No partial vesting shall occur for incomplete service periods or unmet milestones.
Vesting with cross-functional collaboration clause
This variation applies to agreements promoting teamwork across departments.
The equity granted under this Agreement shall vest upon the successful completion of cross-functional projects involving at least [specific number] departments, subject to approval by the management team.
Multi-phase vesting clause
This variation applies to agreements with phased timelines.
The equity granted under this Agreement shall vest in multiple phases: [specific percentage]% shall vest after [specific time period], and the remaining equity shall vest over [specific duration], in equal monthly installments.
Vesting reset clause
This variation applies to agreements allowing a reset under specific conditions.
The vesting schedule under this Agreement may be reset if the recipient takes on a significantly different role within the Company. Any reset shall be subject to mutual agreement and documented as an amendment to this Agreement.
Equity cliff conversion clause
This variation applies to agreements converting cliffs into monthly vesting.
Upon completion of the [specific number]-month cliff, the equity granted under this Agreement shall convert into equal monthly vesting for the remaining duration of the vesting schedule.
Vesting linked to regional expansion clause
This variation applies to agreements tied to geographic growth.
The equity granted under this Agreement shall vest upon the successful establishment of the Company’s operations in [specific region], subject to verification by the expansion team and Board approval.
Time-based vesting with penalty for early exit clause
This variation applies to agreements penalizing early exits.
The equity granted under this Agreement shall vest on a time-based schedule, but if the recipient voluntarily exits before the vesting period ends, [specific percentage]% of previously vested equity shall be forfeited as a penalty.
Vesting schedule for interim leadership clause
This variation applies to agreements with temporary leadership roles.
The equity granted under this Agreement shall vest over [specific duration], contingent on the recipient fulfilling interim leadership responsibilities until a permanent appointment is made.
Vesting linked to patent filing clause
This variation applies to agreements requiring intellectual property contributions.
The equity granted under this Agreement shall vest upon the successful filing of [specific number] patents by the recipient, provided the patents are directly related to the Company’s operations and approved by management.
Discretionary vesting clause
This variation applies to agreements granting the Board discretionary authority.
The Board of Directors reserves the right to accelerate or modify the vesting schedule under this Agreement at its discretion, provided such changes comply with applicable laws and Company policies.
Equity vesting for non-compensatory roles clause
This variation applies to agreements for advisory or pro-bono roles.
The equity granted under this Agreement shall vest in recognition of the recipient’s advisory contributions, with no monetary compensation. Vesting shall occur quarterly over [specific duration], contingent on ongoing involvement.
Vesting with sustainability targets clause
This variation applies to agreements linked to environmental goals.
The equity granted under this Agreement shall vest upon the achievement of specific sustainability targets, such as reducing the Company’s carbon footprint by [specific percentage] or achieving [specific certification].
Hybrid milestone-and-revenue vesting clause
This variation applies to agreements combining revenue and milestone targets.
[Specific percentage]% of the equity under this Agreement shall vest upon achieving [specific revenue target], while the remaining [specific percentage]% shall vest upon meeting [specific operational milestone].
Long-term incentive vesting clause
This variation applies to agreements emphasizing long-term retention.
The equity granted under this Agreement shall vest over [specific duration, e.g., 10 years], with annual vesting increments designed to promote long-term commitment to the Company’s goals and values.
Equity vesting with charitable contribution requirement clause
This variation applies to agreements incentivizing charitable efforts.
The equity granted under this Agreement shall vest upon the recipient making charitable contributions on behalf of the Company, totaling at least [specific amount] annually, as approved by the Board of Directors.
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