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The company also doles out annual stock awards that vest over five years.

What's the meaning of "vest over five years" in the sentence above?

I found that vest means to belong to someone legally.

Does it mean that it takes 5 years for employees to own annual stocks?

  • Just for the record, "invest" is a related but more common word from the same root. – Justin Young Nov 20 '15 at 17:34
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Your understanding is basically correct. To vest there is an intransitive verb. The stocks "vest", that is, the stock attains the status of being fully owned by the employee, such that the employee can sell or trade the stock. It takes five years to attain that status. One could also phrase it that the employee's interest in the stocks vests. The "interest" (a legal term) refers to the degree of ownership or possession.

  • In addition, I think that vesting over 5 years implies that the vesting is partial during that time; for instance, perhaps the employee vests in 20% of the company-contributed stock each year, so that, after 5 years, the employee is vested in all of it. If there were no incremental vesting like this, I would expect it to say "vests in 5 years". – rcook Nov 20 '15 at 20:08

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