Joe Hadzima, Jr.
2020Go to resource
Vesting is the concept that stock ownership should be based on the achievement of the goals of the business. Vesting is often imposed by founders on each other's stock and on stock given to new hires. Investors almost always require vesting on the theory that when their check clears your bank, they have done all they said they would do, yet all you have done is promise to achieve success. Vesting provides an "incentive" for you to keep your end of the bargain. For example, you and I may agree that you will receive 10,000 shares of stock in my new venture if you join the team. Implicit in this is that you will be applying your skill set to help the team achieve "success" for the business. If the business is successful, then you have "earned" the ownership of these 10,000 shares.