In a growth-stage company, value rarely lies in the assets shown on the balance sheet, but in the people who hold the project together: founders who spend years building it and key profiles who accept below-market pay in exchange for a share in future growth.<\/p>\n
The problem appears when one of those people leaves. If the equity was handed over in a single block and without any conditions, the company is left with an absent shareholder who retains a significant percentage and with very few tools to correct it. Vesting exists precisely to avoid that scenario.<\/p>\n
Vesting is the mechanism by which the right over a share in the company, or over the instrument that represents it, is consolidated progressively, conditional upon the beneficiary remaining with the business and, on occasion, upon the fulfilment of certain milestones. Until that consolidation takes place, the position is not fully theirs.<\/p>\n
Two constructions that are confused in practice are worth distinguishing. In vesting in the strict sense, the beneficiary is not yet an owner: they hold a right to acquire shares in the future which matures over time. This is the scheme used for stock options and phantom shares. In reverse vesting, by contrast, the founder owns all of their shares from day one, and what is agreed is the obligation to transfer back the unvested portion if they leave the company early. This second formula is the usual one among founders, because it respects the initial allocation of the capital and does not interfere with the ordinary exercise of shareholder rights during the plan.<\/p>\n
Vesting finds its natural home in the shareholders’ agreement. That is also where its main weakness lies: article 29 of the Spanish Companies Act provides that reserved agreements between shareholders are not enforceable against the company. Vesting that lives only in the agreement binds whoever signs it, but does not prevent a transfer carried out outside that agreement from ultimately taking effect vis-\u00e0-vis the company.<\/p>\n
This is why the design matters as much as the content. The usual approach is to reinforce the clause with an irrevocable call option in favour of the remaining shareholders, granted in a public deed and with sufficient power of attorney for its execution, without losing sight of the fact that the transfer of shares requires a public document under article 106 of the Companies Act. Where the transaction justifies it, the commitment is moved into the bylaws as an ancillary obligation, under the terms of articles 86 and following, which makes it registrable and enforceable against third parties. Statutory restrictions on transfer or a pledge over the shares as security for performance are usually added. Without that structure, vesting works while the parties cooperate and stops working precisely when it is needed.<\/p>\n
The vesting period is the first decision. The market standard sits at four years, with monthly or quarterly accrual once the initial tranche has passed. It is long enough to retain and short enough not to be off-putting. In later rounds or in sale processes, it is common for the investor or the buyer to require that the founders’ clock be restarted as a condition of the transaction.<\/p>\n
The cliff is the initial period during which nothing vests: if the beneficiary leaves before that date, they do not acquire a single share; once the date is reached, the block corresponding to that first year vests at once, twenty-five per cent under the classic scheme, and periodic accrual continues from there. Its purpose is to weed out arrangements that do not work without generating residual positions in the capital.<\/p>\n
Acceleration governs what happens if a liquidity event occurs before the plan is completed. There are two configurations. Under single-trigger acceleration, vesting is completed by the change of control alone. Under double-trigger acceleration, it is further required that the beneficiary be terminated or see their conditions substantially modified within a set period after the transaction. Investors and buyers almost unanimously prefer the double trigger, because the single trigger empties the retention incentive of content precisely at the moment when the acquirer needs it most. Partial acceleration is also frequently agreed, whether for a percentage of the outstanding portion or for a number of additional months.<\/p>\n
Alongside these three elements, the plan must resolve what happens on departure. The distinction between good leaver and bad leaver determines both the volume of shares affected and the price: fair or market value in the first case, nominal value or a symbolic price in the second. Precision is particularly advisable here, and it must be settled who acquires, within what deadline and under which valuation formula: if the company itself is to be the acquirer, the limits on treasury shares set out in the Companies Act must be taken into account.<\/p>\n
With founders, the work is done on real, already issued shares owned by the shareholder, through reverse vesting. During the plan, the founder retains their voting and economic rights as normal, because they are a full shareholder; what is conditional is their permanence in the capital, not the exercise of their rights. The commitment is documented in the shareholders’ agreement<\/a> and is usually accompanied by dedication undertakings, post-contractual non-compete obligations and the assignment to the company of the intellectual and industrial property rights generated, which is frequently where the real risk is concentrated.<\/p>\n With key employees the approach changes. Delivering real shares to a broad team makes management more expensive and slower, because every transfer requires a public deed, and it multiplies minority shareholders together with the information and challenge rights that this entails. Two instruments are therefore normally used.<\/p>\n