Cliff
Definition
Cliff: A cliff is a period of time, typically one year, that an employee must work before any equity vests. If they leave before the cliff, they forfeit all unvested shares. After the cliff, the remaining shares vest over the remaining vesting period, usually monthly over three more years.
Example Usage
“She left after 11 months, so her 4-year grant with a 1-year cliff meant she received no equity.”
Common Misconceptions
Related Terms
Vesting
Vesting is the process by which employees earn their equity over time. The standard vesting schedule is 4 years with a 1-year cliff, meaning no equity...
Stock Options
Stock options give employees the right to purchase company shares at a fixed price (strike price) after vesting. Options are a common form of equity c...
Equity
Equity represents ownership in a company, typically through shares of stock. Founders receive equity at formation, employees through stock options, an...
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