Explicit service period definition
/What is an Explicit Service Period?
An explicit service period is the amount of time stated in a share-based payment award that an employee must serve before the award will be paid out. In effect, the passage of time is being used as the basis for compensation. This is an essential concept in the accounting for stock-based compensation.
Example of an Explicit Service Period
For example, if an award document states that shares will vest after four years of continuous service, then four years is the explicit service period. Or, if a business grants stock options to an employee that will vest at the end of two years, then two years is the explicit service period.