Vested Interest

A vested interest refers to a legal or financial right that a person is entitled to receive in the future, often contingent upon meeting certain conditions such as completing a specified vesting period. It represents a guaranteed claim to a benefit, such as cash, stock options, or retirement funds, once the vesting requirements are satisfied.

Example: An employee is granted 1,000 stock options by their company with a 4-year vesting schedule. This means the employee gains the right to exercise 25% of the options each year. After four years, the employee will have a fully vested interest in all 1,000 options, allowing them to buy the shares at the predetermined price.