How would you define a "four-year vesting schedule"?

A "four-year vesting schedule" is defined as a plan for gradual ownership transfer. This means that an individual, often an employee or a co-founder, earns the right to a certain amount of equity in a company over a four-year period. Instead of receiving all the equity upfront, the individual will gain a portion of their ownership incrementally—typically monthly or annually—over the length of the vesting schedule.

This approach not only incentivizes long-term commitment to the company but also helps to align the interests of the employee with those of the company’s performance. If the individual leaves the company before the full four years, they will retain only the portion of equity that has already vested, which serves to protect the company and motivate the individual to contribute to its success over time.

The other choices, while they touch on aspects of equity and ownership, do not accurately capture the essence of a vesting schedule. A period during which equity is locked refers more to restrictions on sale or transfer rather than the gradual acquisition aspect. A fixed duration before equity is issued suggests a waiting period that doesn't reflect the gradual nature of vesting. Lastly, a method for short-term equity distribution implies immediate allocation rather than a structured, time-based process associated with