Vested Benefit

A financial incentive of employment that an employee is fully entitled to. Employers sometimes offer their employees benefits that they acquire full ownership of gradually or suddenly, as they accumulate more time with the company. This process is called graduated vesting or cliff vesting, and its purpose is to give employees a reason to stay with the company long term. When the employee has earned full rights to the incentive after a predetermined number of years of service, those benefits are called fully vested.

An example of a type of benefit that might vest gradually is shares of the company's stock. An employee might be awarded 100 shares of stock as a performance bonus after year one of employment. Under a graduated vesting plan, the employee might acquire full ownership of 20% of the shares after year two, 40% after year three, 60% after year four, 80% after year five and 100% after year six. The stock bonus would be a partially vested benefit in years two to five, and a fully vested benefit after year six.

Investment dictionary. . 2012.

Look at other dictionaries:

  • vested benefit — A benefit owing to a member of a pension scheme, whether or not the member is employed by the organizers of the scheme …   Big dictionary of business and management

  • Vested Benefit Obligation - VBO — The actuarial present value of pension plan benefits belonging to employees of an organization. The vested benefit obligation (VBO) is one measure of a pension fund s liability. The VBO only considers benefits that have vested in an employee, as… …   Investment dictionary

  • vested — vest·ed / ves təd/ adj 1: fully and absolutely established as a right, benefit, or privilege: not dependent on any contingency or condition; specif: not subject to forfeiture if employment terminates before retirement vested pension benefits 2:… …   Law dictionary

  • Vested interest — Vest ed interest 1. a special personal interest, usually financial, in an existing system, law, or institution, which hinders a person from making objective decisions regarding that system, law, or institution. A vested interest may be one which… …   The Collaborative International Dictionary of English

  • vested interest — n. 1. an established right that cannot be eliminated, as to some future benefit 2. close involvement in promoting personal advantage 3. [pl.] a number of groups cooperating or competing in pursuing selfish goals and exerting controlling influence …   English World dictionary

  • Vested Interest — 1. The lawful right of an individual or entity to gain access to tangible or intangible property now or in the future. A vested interest is an entitled benefit, which can be conveyed to a separate party. There is usually a vesting period before… …   Investment dictionary

  • vested interest — UK [ˌvestɪd ˈɪntrəst] / US [ˌvestəd ˈɪntrəst] noun Word forms vested interest : singular vested interest plural vested interests a) [singular] a special reason for wanting things to happen in a particular way, because you will benefit from this… …   English dictionary

  • vested interest — noun 1. (law) an interest in which there is a fixed right to present or future enjoyment and that can be conveyed to another • Topics: ↑law, ↑jurisprudence • Hypernyms: ↑interest, ↑stake 2. groups that seek to control a social system or activity… …   Useful english dictionary

  • vested interest — vest|ed in|ter|est [ ,vestəd ıntrəst ] noun singular a special reason for wanting things to happen in a particular way, because you will benefit from this: have a vested interest in (doing) something: Clearly, local businesses have a vested… …   Usage of the words and phrases in modern English

  • vested — adjective Date: 1766 1. fully and unconditionally guaranteed as a legal right, benefit, or privilege < the vested benefits of the pension plan > 2. having a vest < a vested suit > …   New Collegiate Dictionary

Share the article and excerpts

Direct link
Do a right-click on the link above
and select “Copy Link”

We are using cookies for the best presentation of our site. Continuing to use this site, you agree with this.