"vest"
I came across the word - vest - in the accounting and the business law book for many times. I'm so confusing about the words. For example: A company recognizes compensation expense in the periods in which its employees perform the service. Unless otherwise specified, the service period is the vesting period - the time between the grant date and the vesting date.

In the above example, it seems that VEST mean "ending", but in other context, it seems means anything else, unfortunately, I don't have an example on hand.

I guess someone who knows well about laws would know very well about the word. But, anyway, any help would do. Thanks.

Question

"vest"
I came across the word - vest - in the accounting and the business law book for many times. I'm so confusing about the words. For example: A company recognizes compensation expense in the periods  in which its employees perform the service. Unless otherwise specified, the service period is the vesting period - the time between the grant date and the vesting date.

In the above example, it seems that VEST mean "ending", but in other context, it seems means anything else, unfortunately, I don't have an example on hand.

I guess someone who knows well about laws would know very well about the word. But, anyway, any help would do. Thanks.

Answer

I will try to answer this one, but I am not an accountant, and it is a little complicated.
Suppose that your job entitles you to a pension.

However, you only get the pension if you work five years. If you don't work at least five years for the company, then you get nothing.

After five years, your pension "vests," in other words, you have possession of it and will get it when you retire.

The word is also used in the context of stock options.  If you get a stock option, you have a chance to buy stock at some point in the future.  You might be promised stock options at the end of every year, for example.  However, you can't buy the stock until the option "vests" at the end of the year, and if you leave the company before the option is "vested," then you don't get it.

Basically, it can apply to the moment you take ownership of almost any kind of property.

That's my best understanding of the word.  I hope that helps.

Answer

It means that a person has an absolute right to some present or future interest in something of value. When a right has vested, the person is legally entitled to what has been promised and may seek relief in court if the benefit is not given.
In your example, David was not vested, meaning that he was not legally entitled to his shares of the company.

Answer

Another example in the accounting book:  "Because David was never vested, he had to forfeit his shares (of the company)."

Answers · 5

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