Accelerated Vesting

What Does It Mean?
This is a kind of vesting which happens at a better pace as compared to the initial vesting in the stock option plan of the company. As a result of this, the benefits come to the option holder much earlier than that in the initial vesting plan. The accelerated vesting plan would spread the cost linked with stock option plan of the company also at a faster rate.

How Is It Applied in Options Market?
It was not compulsory for U.S. companies to show an account of the stock option payments done to executives as well as staff, till the implementation of FAS-123®. Once this FAS was adopted, it became mandatory for the companies to account for the same resulting in a huge expenditure for the company. With the help of accelerated vesting plan, it became easy for the companies to adopt it and spread the vesting cost over the years resulting in the future income reflecting higher than the actual, if the vesting happens as per schedule

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August 27, 2008 · Filed Under Stock Options Trading

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