You could vest according to time. Although you probably wouldn't do the typical four year vest with a one year cliff in the scenario discussed here, you could easily demand that the contractor continue to provide certain services, such as x hours of support each month, to the company over a period of time (say one year). You could also vest upon arbitrary milestones (completion of prototype, launch, acquisition of first paying customer, etc.).
All a vesting schedule does is state when certain restrictions associated with the stock (or stock options) lapse.
Classification does not matter, except for incentive stock options, which are not possible here. You can grant non-qualified stock options to contractors and you can of course issue stock (restricted or not) to just about anyone.
Comments
Help me understand how someone who doesn't work for the company vests? What triggers the vesting?
You could vest according to time. Although you probably wouldn't do the typical four year vest with a one year cliff in the scenario discussed here, you could easily demand that the contractor continue to provide certain services, such as x hours of support each month, to the company over a period of time (say one year). You could also vest upon arbitrary milestones (completion of prototype, launch, acquisition of first paying customer, etc.).
All a vesting schedule does is state when certain restrictions associated with the stock (or stock options) lapse.
Classification does not matter, except for incentive stock options, which are not possible here. You can grant non-qualified stock options to contractors and you can of course issue stock (restricted or not) to just about anyone.