In my post, Founder’s Equity Will Vest After Investment, I describe the mechanism by which founders earn back their equity over time. Vesting, earning equity over time, also affects the stock options of key managers and employees.

While vesting provides key people with an incentive to stay with the company over time, it can leave some concerned that they won’t get their fair share if the company is sold quickly. For example, if a founder owns 20% of the company and his stake is set to vest over four years (5% per year), he might wonder how much he will be paid if the company is sold after the first year. Will he be paid out as if he owns 5% or 20% (the total amount of equity allocated to him, not all of which had vested)?

The saving grace for individuals exposed to a vesting program is acceleration. An acceleration clause accelerates vesting of stock in pre-defined situations. One commonly pre-defined situation is a change of control, a legal way of describing an acquisition.

If the founder in the scenario above had an acceleration clause that was triggered by this acquisition, he would own 20% (or another number determined by his acceleration clause) at the time of sale.