Asked by Chelise Lomax on Feb 18, 2024
Verified
The term vesting can best be described as which of the following?
A) paying shares out to employees on a regular,usually annual basis
B) imposing equity forfeitures on cofounders over a certain period of time on a piecemeal basis should they not stay with the company
C) defining a particular time and range of duties the cofounders must contribute to the business
D) determining the investment that each cofounder must contribute to the start and growth of the business
A) paying shares out to employees on a regular,usually annual basis
B) imposing equity forfeitures on cofounders over a certain period of time on a piecemeal basis should they not stay with the company
C) defining a particular time and range of duties the cofounders must contribute to the business
D) determining the investment that each cofounder must contribute to the start and growth of the business
Vesting
The concept of imposing equity forfeitures on cofounders over a certain period of time on a piecemeal basis should they not stay with the company.
- Understanding the concept of vesting in relation to employee compensation and ownership.
- Recognizing the importance of vesting in retaining key employees and aligning their interests with the company's success.
- Differentiating between vesting as a mechanism for distributing shares to employees and imposing equity forfeitures on cofounders.
Verified Answer
GP
Gabriel Parsons
Feb 18, 2024
Final Answer :
B
Explanation :
Vesting refers to the process of earning ownership or equity in a company over a period of time. Option B best describes how vesting works, as it imposes equity forfeitures (i.e. loss of ownership) on co-founders who do not stay with the company for a certain amount of time. Option A describes stock dividends, while option C and D describe job responsibilities and initial investment, respectively, and are not related to vesting.
Learning Objectives
- Understanding the concept of vesting in relation to employee compensation and ownership.
- Recognizing the importance of vesting in retaining key employees and aligning their interests with the company's success.
- Differentiating between vesting as a mechanism for distributing shares to employees and imposing equity forfeitures on cofounders.
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