How to create a milestone vesting schedule

This article explains how you can add a milestone based vesting schedule for an option grant (or any other types of equity)

You can customise the schedule as you like by adding any number of tranches, which can be either time-based or performance-based. Add milestone information to tranches. Condition schedules can be used to represent schedules that are not purely time-based. For instance, a schedule that vests 1/3 of the total grant every year for 3 years IF the grantholder has achieved certain sales targets should be represented using Vesting Conditions.

The following will demonstrate how to add these vesting schedules for options, please note that the same process holds for other types of equity awards that have vesting schedules (warrants, share grants etc.)

Firstly, click Options (under Equity Awards) -> Grants -> Issue Grant (Green Button) -> Register Offline Issuance. 

[The difference between 'Registering Offline Issuance' and 'Issue Online' is that the 'Issue Online" is executing a new grant issuance including documentation and signatures on Capdesk.]

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Choose the stakeholder that you would like to grant the options to. If the stakeholder is not currently recorded on Capdesk, click 'Or Add a New Optionholder Instead'. Provide the required details of the new optionholder, such as their name, address, email and registration number (if the grantholder is a company).

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Fill in the relevant details of the option grant until you reach the vesting schedule. The main field to note in this instance is 'Options', as the total amount of options granted has to match the total amount of options that vest in the custom vesting schedule. Note in this example, we are granting 500 options.

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Select 'Vesting Conditions' and specify the date that the options will start to vest. Click 'Add' to add each vesting tranche.

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The vesting tranche will determine how many options to vest based on the relative condition.

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Keep adding each tranche until the vesting schedule is complete. 

If a condition has already been achieved, simply record how many options vested due to this by filling in the 'vested' field. The corresponding 'vesting date' will also have to be recorded. 

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As you can see, of the 500 total scheduled to vest, 400 of which have already done so. As the total scheduled is the same as the amount granted, we can click 'Save Draft' which is found at the bottom of the page.

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You will notice that if the total scheduled to vest does not match with the total options granted, you will get an error message similar to the one below (in this example, the last tranche was not considered and thus the error message).

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If the total scheduled matches the total granted however, the grant will be saved. Click Options (under Equity Awards) -> Grants -> Search for the grant -> View. This will display the specific details about the grant; in particular, the custom vesting schedule can be found under 'Vesting'.

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If you would like to make any adjustments to the custom vesting schedule, click the action button that corresponds to the grant -> Modify Vesting. This is where you can adapt the same method to change the schedule (this can only be done in 'drafts', not when the grant has been 'published').

Once everything is on order with the grant, click 'Publish and Notify' to inform the optioholder about their grant (this can occur once you have gone live).

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Once the grant has been published and the milestone has been achieved, the relevant options will now have vested and this will need to be recorded on Capdesk. To do this, click the corresponding action button (3 dots far right) of the grant and then 'Modify Vesting'.

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Click 'Edit' on the tranche that has now vested.

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State the date that the options vested and the vested quantity, then press 'Okay'.

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After this has been completed, scroll to the bottom of the page and press 'Save'.

Now when you click 'View' to examine the vesting schedule, you will notice that the relevant tranche has vested.

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If you need further assistance, you can reach out to us by submitting a support ticket here.