what does VESTED mean?

[slycat]

So my manager tells me since i have been around since the company's inception, i am the only person, other than the founders, who is fully vested and have fully vested stock options.

What does that mean really? If i quit, get fired, or change jobs now, do i lose it? I was thinking since i am vested, do i have to stay on to not lose my vested 'interests'?...whatever they may be?

Any enlightened ones pls enlighten me. TIA!

 

[kstu]

vested=yours

 

[imported_LoKe]

http://dictionary.reference.com/browse/vested

protected or established by law, commitment, tradition, ownership, etc.: vested contributions to a fund.

 

[msparish]

Once you are vested, that means it is yours. If you are 100% vested, and you quit, you get to keep 100% of the options.

 

[MysticLlama]

The reverse, it actually means that they are yours now, whether or not you leave.

A lot of places have a 4-6 year schedule for vesting.

So on a 5 year, you get 20% per year vested, which becomes yours.

So if you have $10k in there and you've been there two years, 40% would be yours, so you'd take $4k with you if you transferred it out.

You get to keep everything that's in there for you.

 

[MysticLlama]

Unless of course you work in real estate, in which case, you should expect your red vest to show up shortly.

 

[broon]

Usually in any 401k matching or stock grants...once vested they are yours when you leave. If you aren't vested yet and quit or get fired, you do not get to keep the company's contributions to your 401k or stock/option grants.

You will get to keep everything.

 

[CPA]

Um, hold up everyone. In a 401K, yes, vested means it's your's....

BUT for stock options, in which you haven't actually purchased the stock yet (doesn't happen until time of exercise of option), most plans call for you to exercise the options within a certain timeframe after you have left the company - usually 90 days. That means if you quit and don't exercise the option within that timeframe, you will lose it. Check your plan details

 

[Miramonti]

Fully vested means you can finally quit anytime.

 

[Engraver]

It is the closest thing in the business world to being "made". You just became Joe Pesci.

 

[Corporate Thug]

vested means legally binding by law and cannot be unilaterally revoked.

 

[alien42]

vested means sell sell sell

 

[CPA]

People, people, people, stock options (ESOs) vestment is different than a 401K vestment.

ESOs include maturity dates, which, of course, 401k vestments don't. Most plans don't allow you to keep a vested stock option grant forever. You only have a certain period of time to exercise it. Furthermore, almost all stock options require you to exercise within a certain time frame after the vestment even if you continue to be an employee.

For example, I have 500 vested stock option grants in my company right now. They are 10 year options that expire next year. Since the price they were granted at is higher than the current market price, I will lose them unless I exercise and pay the difference (which isn't worth it).

 

[Dirigible]

Originally posted by: CPA
People, people, people, stock options (ESOs) vestment is different than a 401K vestment.

ESOs include maturity dates, which, of course, 401k vestments don't. Most plans don't allow you to keep a vested stock option grant forever. You only have a certain period of time to exercise it. Furthermore, almost all stock options require you to exercise within a certain time frame after the vestment even if you continue to be an employee.

For example, I have 500 vested stock option grants in my company right now. They are 10 year options that expire next year. Since the price they were granted at is higher than the current market price, I will lose them unless I exercise and pay the difference (which isn't worth it).

Yes. Listen to CPA and check your company's policies.

Even for my vested stock options, if I quit I only have 90 days to exercise them or I lose them. They also have an expiration date, after which I will lose them.

 

[Fern]

Originally posted by: CPA
Um, hold up everyone. In a 401K, yes, vested means it's your's....

BUT for stock options, in which you haven't actually purchased the stock yet (doesn't happen until time of exercise of option), most plans call for you to exercise the options within a certain timeframe after you have left the company - usually 90 days. That means if you quit and don't exercise the option within that timeframe, you will lose it. Check your plan details

^ What he says (another tax CPA here).

Edit: Employee stock option plans are required by the IRS to written etc. And before you make any move with regard to those options, check with a tax CPA. It is possible to have taxable income from just excercising the options (even if you haven't yet sold them, i.e., no cash for income tax bill).

Sounds like a closely held company, may be difficult to sell such stock. In fact, can have provisions requiring Board approval on any proposed sale by you etc.

And if your company doesn't have a good in-house CPA, or outside firm advising them on this stuff be extra careful. I've seen this kinda thing f*cked up quite a bit by otherwise well intentioned small companies who really didn't understand what they were doing.

Fern

 

[Squisher]

So, how much loot do you have?

(today's market value of a share - original grant price of the stock options) X number shares they've given you options on

 

[CPA]

Originally posted by: Squisher
So, how much loot do you have?

(today's market value of a share - original grant price of the stock options - mandatory 28% Fed W/H - less 7.65% FICA - less mandatory state withholding - less SEC fee - less broker commission) X number shares they've given you options on

Fixed.

 

[spidey07]

Originally posted by: CPA
Um, hold up everyone. In a 401K, yes, vested means it's your's....

BUT for stock options, in which you haven't actually purchased the stock yet (doesn't happen until time of exercise of option), most plans call for you to exercise the options within a certain timeframe after you have left the company - usually 90 days. That means if you quit and don't exercise the option within that timeframe, you will lose it. Check your plan details

That's correct.

And the length of time they are good for is important. Depending on the plan and your position there could be blackout periods where you can't do anything with the stock.

So there are many ways for you to completely lose those options and that could mean losing a ton of potential cash/money/stock.

Take for example you quit on 9/30, your options are only good for 30 days, but you are in a blackout period from 9/28 - 10/15. = you're screwed. Also be prepared to get reamed by taxes, it will most likely be witheld at the maximum.

 

[Squisher]

Originally posted by: CPA

Originally posted by: Squisher
So, how much loot do you have?

(today's market value of a share - original grant price of the stock options - mandatory 28% Fed W/H - less 7.65% FICA - less mandatory state withholding - less SEC fee - less broker commission) X number shares they've given you options on

Fixed.

Always raining on someone's parade.

 

[slycat]

Originally posted by: spidey07

That's correct.

And the length of time they are good for is important. Depending on the plan and your position there could be blackout periods where you can't do anything with the stock.

So there are many ways for you to completely lose those options and that could mean losing a ton of potential cash/money/stock.

Take for example you quit on 9/30, your options are only good for 30 days, but you are in a blackout period from 9/28 - 10/15. = you're screwed. Also be prepared to get reamed by taxes, it will most likely be witheld at the maximum.

huh? i don't really understand...if i quit on 9.30 and i have 30days to exercise my option(meaning buy the stock?), and the blackout is 9.28-10.15, wouldn't i still have 15days to buy those stocks?

 

[slycat]

here's the other kicker...

The company changed its name from A to B. My options are from A. The B papers aren't out yet. Should i be worried? They can't screw me over right?

 

[CPA]

Originally posted by: slycat
here's the other kicker...

The company changed its name from A to B. My options are from A. The B papers aren't out yet. Should i be worried? They can't screw me over right?

Can't tell. What was the reason for the name change? Was the name change on the Parent company (the Holding or LLC company) or just on your subsidiary?

 

[piasabird]

OK what happens is you have a savings plan and then you pay into the savings plan, but the Company also would kick in an extra 2% or some such thing. If you are vested you get the company contribution. If you are not vested you do not get to keep the company contribution.

With stock options, usually you have to hold the option for a set period of time. I think they would give you the option to buy the stock. But what normally happens is that after a certain period of time people sell the stock and keep the profit. Often the selling of the stock is handled by a firm and they get a cut also. Then the tax man cometh to steal even more of your money.

 

[spidey07]

Originally posted by: slycat

Originally posted by: spidey07

That's correct.

And the length of time they are good for is important. Depending on the plan and your position there could be blackout periods where you can't do anything with the stock.

So there are many ways for you to completely lose those options and that could mean losing a ton of potential cash/money/stock.

Take for example you quit on 9/30, your options are only good for 30 days, but you are in a blackout period from 9/28 - 10/15. = you're screwed. Also be prepared to get reamed by taxes, it will most likely be witheld at the maximum.

huh? i don't really understand...if i quit on 9.30 and i have 30days to exercise my option(meaning buy the stock?), and the blackout is 9.28-10.15, wouldn't i still have 15days to buy those stocks?

Sorry, I meant 11/15 for the end of the blackout. You get my drift though. All of this depends on the terms of your option grant. Without reading this then you really are just guessing.

 

[PingSpike]

nevermind