Intro
A vesting schedule can be defined when making a grant or issuing shares. Vesting is the time a stakeholder must be employed by or otherwise connected to the company before the entitlement lapses and the grant can be exercised. The following characteristics define the vesting plan: the vesting duration, or length of the allotment agreement; the interval of how frequently shares are issued; and a vesting 'cliff', a period that must pass before any grants are issued to the stakeholder.
How do I set up a vesting schedule?
Vesting schedule
You can set up a vesting plan in the optional setting of Equity Plan transactions, such as grants and plans, and stock transactions, such as share issuance and share transfers.
Go to Ownership > Transactions > Add transactions > Select "Add Plan", "Single Grant", "Issue Shares" or "Share Transfer"
Which vesting types exist?
Ledgy offers three kinds of vesting:
Time-based (simple) vesting
With this type, the grants or shares vest evenly over the entire length. You can make the following settings for the time (simple) type:
Rounding:
Down: Rounding down to the nearest whole option or share for any number less than 0.99. For example, 100.99 will be rounded down to 100.
Up: Rounding up to the nearest whole option or share for any number more than or equal to 0.01. For example, 100.01 will be rounded up to 101.
Nearest: Rounding up to the nearest whole option or share anything more than or equal to 0.5. For example, 100.5 will be rounded to 101, while 100.49 will be rounded to 100.
Vesting start date: This optional field allows you to define when the vesting begins.
Vesting on: You decide on which day the shares or grants should vest.
Grant date: Vesting will take place on the same day of the month as the grant date. This is the default setting.
Start date: Vesting will take place on the same day of the month as the start date.
First day of the month: Vesting will occur on the month's first day.
Last day of the month: Vesting will take place on the last day of the month.
Duration: Define the vesting runtime in months.
Vest every: This is the interval in months that specifies in what increments the grant vests.
Cliff: Define the minimum number of months a stakeholder must stay at the company before receiving the first batch of vested options.
Time-based (custom) vesting
Modify how many per cent of the grant or shares are vesting per self-defined period. You can make the following settings for the time (custom) type:
Rounding:
Down: Rounding down to the nearest whole option or share for any number less than 0.99. For example, 100.99 will be rounded down to 100.
Up: Rounding up to the nearest whole option or share for any number more than or equal to 0.01. For example, 100.01 will be rounded up to 101.
Nearest: Rounding up to the closest whole option or share anything more than or equal to 0.5. For example, 100.5 will be rounded to 101, while 100.49 will be rounded to 100.
Vesting start date: This optional field allows you to define when the vesting begins.
Percentage: Determine what percentage of the grant amount will vest per period. The percentages of all periods must total 100%.
Duration: Define the vesting runtime in months.
Vest every: This is the interval in months that specifies in what increments the grant vests.
Performance-based vesting
With this type, the grants or shares vest when the stakeholder completes your defined milestones. Please read this dedicated article about performance-based vesting conditions.
Multi-trigger vesting
With this type, you can combine time-based vesting (simple or custom) with performance-based vesting conditions.
Under the Vesting section of the transaction form, pick Time schedule + triggers.
It will open the following section that has ~3 parts:
Additional vesting triggers (all of them must be centralised vesting performance conditions)
General Setting + Accelerate
Notes on multi-trigger vesting!
How does Ledgy calculate vesting within multi-trigger vesting?
For a grant to vest, all its triggers must be achieved. This means:
If the time-based trigger is a simple vesting of 48 months (vesting every 6 months with a 6-month cliff), then with “normal” vesting, this meant that after two years, half of the grant was vested.
Now, if any of the two additional triggers
10M ARRandLiquidityare not achieved after two years, the vested amount is0.For the vested amount to be indeed half of the grant, we need both
10M ARRandLiquidityto be at least 50%achieved(50% represents half the grant)
After four years
If either
10M ARRorLiquidityis not achieved yet, the grant vested will be0(still)If they both are achieved, but one of them is only achieved at
80%, grant vested will be 80% of the grantIf one is achieved
80%and the other is achieved50%, grant vested will be ⚠️40% of the grant(see 80% * 50% = 40%)
How is multi-trigger vesting reflected in the employee dashboard?
The following examples are for a stakehlder's grant that has 1 simple time trigger and 3 additional triggers, Liquidity (achieved ✅), Series B (achieved ✅) and 10M ARR (in progress 🔄).
Vesting card: added tooltip for context
Vesting breakdown: chart update on little hovering tooltip
The chart shows the amount that would be vested if there were no additional triggers. To know how much was vested for real (i.e. can be settled/exercised), check the number next to Grant X (it is 0 in our example) or go to the Holdings page, which is the employee dashboard’s true single source of truth.
Vesting breakdown: If you click the i-icon, you’ll see more insights
How can I pause the vesting?
You can pause the vesting, if you want to know more on how to pause a vesting schedule, please read this article.
How can I accelerate the vesting?
You can accelerate the vesting so that all grants or shares will fully vest on a specific date.
How does Ledgy notify the stakeholders that grants or shares have been vested?
The app sends email notifications when a vesting event occurs.
Vesting events are:
A vesting cliff is ending
When grants vest on a given date
Vesting is ending
Limitation
Email notifications will only sent for simple time-based vesting schedules.