Vesting
Definition
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 vests until the first anniversary, then monthly or quarterly thereafter. Vesting protects companies from early departures.
Example Usage
“After my one-year cliff, 25% of my options vested, then the remainder vests monthly over three years.”
Common Misconceptions
Related Terms
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...
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...
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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