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Vesting Schedule
The timeline over which employees earn ownership of their equity grants, typically four years with a one-year cliff.
Formula
Standard 4-year monthly vesting with 1-year cliff:
- Month 0-11: 0% vested
- Month 12: 25% vested (cliff)
- Month 13-48: Additional 1/48 per month
- Month 48: 100% vested
Definition
What is Vesting?
Vesting determines when equity actually becomes yours. Even if you're granted 10,000 shares, you don't own them until they vest. This protects companies from giving equity to people who leave quickly.
Standard Vesting Terms
Four-year vesting with one-year cliff is standard. After the cliff, 25% vests. The remaining 75% vests monthly or quarterly over years 2-4. Some companies do back-weighted vesting.
Acceleration
Single-trigger acceleration vests all shares if the company is acquired. Double-trigger requires acquisition plus termination. Founders and executives often negotiate for acceleration protection.
Example
Grant: 48,000 options, 4-year vest, 1-year cliff.
- Day 1: 0 vested
- After 6 months (quit): 0 vested
- After 1 year (cliff): 12,000 vested
- After 2 years: 24,000 vested
- After 3 years: 36,000 vested
- After 4 years: 48,000 vested
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