Implicit service period definition
/The implicit service period is a period of time not explicitly stated in a compensation agreement, but which can be inferred from the facts and circumstances of the arrangement. It is much more common for a compensation agreement to contain an explicit service period, such as a specification of five years of service before a stock option grant will be vested.
Example of an Implicit Service Period
For example, an agreement states that the stock options granted to a product sales manager will vest when a product rollout has been completed in a new sales territory; if it is probable that the rollout will be completed in two years, then the implicit service period is two years. If the rollout is more likely to take three years, then that is the implicit service period.
