June 3, 2021
Equity Vesting Schedules: Getting a Fresh Look?
At least two well-known tech companies recently changed their equity plans so that awards fully vest in one year, according to this article. The accelerated approach is better for employees who may not want to be locked in for several years, but also allows companies to save expenses due to smaller awards and more control in light of changing valuations. This blog from Dan Walter gives more color on this and other “post-pandemic” developments:
Equity Compensation vesting schedules are changing to correct a well-known problem. I have discussed before that equity compensation vesting schedules have basically not changed in more than 25 years. Basically, 3 or 4 years for RSUs and stock options. We are not seeing companies use 6 and 7-year schedules to align with long-term goals. We are also seeing equity plans with 1 and 2-year schedules to reflect the “bonus” intent for those companies.
– Liz Dunshee