Typically, shares issued to startup founders at formation are all initially subject to vesting. In other words, the shares are “unvested shares”. (See Why do startup founders subject their shares to vesting?)
Founder vesting terms customarily provide for:
Each Clerky template may vary so be sure you understand the terms provided for in the template you are using. The stock purchase agreement in Clerky's standard Post-Incorporation Setup template typically includes:
A vesting provision that defers vesting for a specified period of time, typically one year. If a founder’s service with a startup terminates prior to the vesting cliff date, then the founder does not vest in any of the shares and the company has the option to repurchase all of the shares from the founder.
A vesting acceleration provision that is triggered only if BOTH of the following events occur: (1) the company is acquired AND (2) the founder is subsequently terminated without cause.
While vesting of a founder's shares is the norm, it is also common for a founder's vesting terms to credit the founder for at least some of the time spent working full-time on the startup prior to the issuance of the founder's shares. For example, if a founder worked full-time on a startup for 12 months prior to the founder's shares being issued, 25% of the founder's shares may be issued as fully vested with the remaining 75% subject to vesting over the subsequent 36 months. We recommend you consult an attorney for assistance with any modification to standard vesting terms.
At formation, Acme Co. issues 4,000,000 unvested shares to Founder Alice. The shares are issued on January 1, 2014 when Alice pays the company $0.00001 per share for a total purchase price of $40.00. Alice's vesting terms are the default specified in Clerky's standard Post-Incorporation Setup template, i.e.:
If Founder Alice’s service with Acme Co. terminates prior to January 1, 2015, Acme Co. has the option to pay $40.00 to Founder Alice to repurchase all 4,000,000 unvested shares.
If Founder Alice’s service with Acme Co. terminates on January 1, 2015, Founder Alice is vested in 1,000,000 shares and Acme Co. has the option to pay $30.00 to Founder Alice to repurchase the 3,000,000 unvested shares.
If Founder Alice’s service with Acme Co. terminates on July 1, 2015, Founder Alice is vested in 1,800,000 shares and Acme Co. has the option to pay $22.00 to Founder Alice to repurchase the 2,200,000 unvested shares.
If Acme Co is acquired on February 1, 2016 and Founder Alice is then terminated without cause on October 1, 2016, the vesting of 100% of the 1,250,000 unvested shares is accelerated so that Founder Alice is vested in all 4,000,000 shares as of October 1, 2016.