Yes. And remember, the company does not put in “money” they buy “shares”. So they own rights to a percentage of the shares, not the money at the time of transaction.

So you need to think of it as: If you leave after 3 years, you keep 40% of the total shares and the company keeps 60% of the total shares. Not “the company put in $20k, so they get 60% back of the $20k”

So IF the market increases, the company will be taking back shares which have increased in value over that time. Conversely if they decline in value, they take back 60% of the shares they bought which are worth less than when purchased.

Otherwise you get a scenario where:

Bob works for a company that has a 5 year vesting schedule. 20% a year to 100% after 5years. At 3 years Bob has $80k in total company contributions but the Market takes a nose dive and his total value is now $50k. The company let’s Bob go. Bob is 60% vested in the company contributions, company still owns 40%. The company can not say “ok, we gave you $80k, we get 40% back, so that’s $32k for us”. Leaving Bob with $50k market value minus company snagging 40% of contributions, so Bob gets $50k-$32k= $18k for Bob.

Instead, the company takes back their percentage of shares purchased with their contribution in relation to their vesting plan. So instead of the company snagging $32k worth of shares, they will get 40% of the shares of the new value of the fund which is $50k, so they get $20k and Bob keeps his vested 60% of shares which is $30k. This is all based on Bob contributes nothing, since he clearly keeps 100% of his contributions.

This is an extremely long winded example of saying the company will take a percentage of the non vested gains back, as well as they take a hit on any non vested losses as well