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Accelerated Vesting

What is 'Accelerated Vesting'

A form of vesting that takes place at a faster rate than the initial vesting schedule in a company's stock option plan. This allows the option holder to receive the monetary benefit from the option much sooner. If a company decides to undertake accelerated vesting, then it may expense the costs associated with the stock options sooner.

Explaining 'Accelerated Vesting'

Prior to the adoption of FAS-123(R), U.S. companies were not required to account for stock option compensation paid to employees and executives. As a result of FAS-123(R), companies were required to account for stock option expenses, which amounted to a large expense for many companies. By adopting an accelerated vesting program, companies can expense their vesting costs over a longer period of time, which makes their future incomes higher than they would be if the options were vested on schedule.


Further Reading


Accelerated vesting of employee stock options in anticipation of FAS 123‐R
onlinelibrary.wiley.com [PDF]
… Therefore, a voluntary adopter that accelerates vesting is forced to expense an amount equal to … employee morale and increase the chance of retaining employees, on the margin, by accelerated vesting … 51 of the 354 accelerating firms in our sample that accelerate the vesting …

Stock option grant vesting terms: Economic and financial reporting determinantsStock option grant vesting terms: Economic and financial reporting determinants
link.springer.com [PDF]
… Therefore, a voluntary adopter that accelerates vesting is forced to expense an amount equal to … employee morale and increase the chance of retaining employees, on the margin, by accelerated vesting … 51 of the 354 accelerating firms in our sample that accelerate the vesting …

Stock and option grants with performance-based vesting provisionsStock and option grants with performance-based vesting provisions
academic.oup.com [PDF]
… Therefore, a voluntary adopter that accelerates vesting is forced to expense an amount equal to … employee morale and increase the chance of retaining employees, on the margin, by accelerated vesting … 51 of the 354 accelerating firms in our sample that accelerate the vesting …

Managerial short-termism and investment: Evidence from accelerated option vestingManagerial short-termism and investment: Evidence from accelerated option vesting
academic.oup.com [PDF]
… Therefore, a voluntary adopter that accelerates vesting is forced to expense an amount equal to … employee morale and increase the chance of retaining employees, on the margin, by accelerated vesting … 51 of the 354 accelerating firms in our sample that accelerate the vesting …

Option acceleration in response to SFAS No. 123 (R)Option acceleration in response to SFAS No. 123 (R)
meridian.allenpress.com [PDF]
… Therefore, a voluntary adopter that accelerates vesting is forced to expense an amount equal to … employee morale and increase the chance of retaining employees, on the margin, by accelerated vesting … 51 of the 354 accelerating firms in our sample that accelerate the vesting …

The structure of performance-vested stock option grantsThe structure of performance-vested stock option grants
link.springer.com [PDF]
… Therefore, a voluntary adopter that accelerates vesting is forced to expense an amount equal to … employee morale and increase the chance of retaining employees, on the margin, by accelerated vesting … 51 of the 354 accelerating firms in our sample that accelerate the vesting …

The retention effects of unvested equity: Evidence from accelerated option vestingThe retention effects of unvested equity: Evidence from accelerated option vesting
academic.oup.com [PDF]
… Therefore, a voluntary adopter that accelerates vesting is forced to expense an amount equal to … employee morale and increase the chance of retaining employees, on the margin, by accelerated vesting … 51 of the 354 accelerating firms in our sample that accelerate the vesting …

Stock option vesting conditions, CEO turnover, and myopic investmentStock option vesting conditions, CEO turnover, and myopic investment
www.sciencedirect.com [PDF]
… Therefore, a voluntary adopter that accelerates vesting is forced to expense an amount equal to … employee morale and increase the chance of retaining employees, on the margin, by accelerated vesting … 51 of the 354 accelerating firms in our sample that accelerate the vesting …

Compensation Contract Adjustments and the Economic Consequences of Financial Reporting in Response to FAS 123R: Accelerated Vesting of Employee Stock …Compensation Contract Adjustments and the Economic Consequences of Financial Reporting in Response to FAS 123R: Accelerated Vesting of Employee Stock …
papers.ssrn.com [PDF]
… Therefore, a voluntary adopter that accelerates vesting is forced to expense an amount equal to … employee morale and increase the chance of retaining employees, on the margin, by accelerated vesting … 51 of the 354 accelerating firms in our sample that accelerate the vesting …



Q&A About Accelerated Vesting


What is accelerated vesting?

Accelerated vesting is a form of vesting that takes place at a faster rate than the initial vesting schedule in a company's stock option plan.

How does this affect balance sheets?

Balance sheets are affected by accelerating the cost of stock options over a longer period of time.

Why would companies want to adopt an accelerated vesting program?

Companies can expense their costs associated with stock options over a longer period of time, which makes their future incomes higher than they would be if the options were vested on schedule.

How does this affect income statements?

Income statements are affected by accelerating the cost of stock options over a longer period of time.

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