Milestone-based vesting (Swedish: milstolpsbaserad vesting) means that rights, such as employee stock options or shares, are earned when the company or the individual reaches set goals. It is sometimes also called performance-based vesting. Goals may concern revenue or a funding round. Unlike linear vesting, vesting is driven by results rather than time.
The terms are set out in the agreement for the incentive program. When the rights lead to new shares, they must be entered in the share ledger. This also affects the company's cap table.
Vesting is the period or conditions that must be met before someone gains full rights to shares or options.
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Linear vesting is a vesting model where equal portions vest at regular intervals over a set period.
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Hybrid vesting is a vesting model that combines time-based conditions with milestones.
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An incentive program gives employees or key people remuneration linked to how the company develops.
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