equity, vestingWhat happens to the unvested stock, if a startup is acquired before the equity of founders and first time employees vests completely?
Let’s say a founder or an early stage employee X started working with a company with E equity to be vested over a 4 years period (E/4 vested annually). After 2 years the company is undergoing an acquisition. Half the stock of X i.e. E/2 is still unvested. Is X expected to leave with E/2 only or can the initial vesting terms or acquisition terms override this in a manner that allows the founder to leave with >E/2 stock on an acqusition?
Personally, as someone who is starting (or at least trying to) a startup, I worked that into the contract for founders (I actually did that yesterday. The contract is for founders only because I am still looking for a partner). The founder will receive the totality of what is agreed upon after five years (provided he fulfill all the requirements, of course), through monthly “installments”(he gets a piece each month), or at the exit (sale, bankruptcy, etc).
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