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]
- Stock option grant vesting terms: Economic and financial reporting determinants – link.springer.com [PDF]
- Stock and option grants with performance-based vesting provisions – academic.oup.com [PDF]
- Managerial short-termism and investment: Evidence from accelerated option vesting – academic.oup.com [PDF]
- Option acceleration in response to SFAS No. 123 (R) – meridian.allenpress.com [PDF]
- The structure of performance-vested stock option grants – link.springer.com [PDF]
- The retention effects of unvested equity: Evidence from accelerated option vesting – academic.oup.com [PDF]
- Stock option vesting conditions, CEO turnover, and myopic investment – www.sciencedirect.com [PDF]
- Compensation Contract Adjustments and the Economic Consequences of Financial Reporting in Response to FAS 123R: Accelerated Vesting of Employee Stock … – papers.ssrn.com [PDF]
