By employing vesting schedules, companies seek to retain talent by providing lucrative benefits contingent upon their continued employment at the firm throughout the vesting period. An employee who leaves employment often loses all benefits which were not vested at the time of their departure. This type of incentive can be done on such a scale that an employee stands to lose tens of thousands of dollars by switching employers. This strategy can backfire when it promotes the retention of disgruntled employees who may hurt morale and simply do the minimum required until it is possible to collect previously unvested benefits.
Investment dictionary. Academic. 2012.
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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… … 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 — 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
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Vesting — In law, vesting is to give an immediately secured right of present or future enjoyment. One has a vested right to an asset that cannot be taken away by any third party, even though one may not yet possess the asset. When the right, interest or… … Wikipedia
Future interest — This article is about the legal concept of future interests in property. For the actuarial valuation of future streams of income, see Future interests (actuarial science) … Wikipedia
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vest — Become applicable or exercisable. A term mainly used on the context of employee stock ownership or option programs. Employees might be given equity in a firm but they must stay with the firm for a number of years before they are entitled to the… … Financial and business terms
Graduated Vesting — The accelerated benefits employees receive as they increase the duration of their service to an employer. A vesting schedule is mandated by federal law for the employers contribution portion of private retirement plans. It specifies the minimum… … Investment dictionary