Vesting Period Law and Legal Definition

Vesting period refers to the time period required to achieve full rights/privileges associated with a profit-sharing or retirement plan offered by an employer. Many companies may give stock options or restricted stock to its employees. The employees do not have full control and ownership of this stock for a certain period of time. This period is called the vesting period. It is the period of time before an employee owns shares unconditionally in an employee stock option plan. During the vesting period an employee does not have the right to transfer or sell the stock or options.

Vesting period may differ from one company to another. However, all vesting procedures have to comply with certain government regulations. A company can buy back its employee’s shares at the original price if the employee terminates employment before the vesting period.