Vesting Schedule

A vesting schedule defines when and how equity grants (RSUs or stock options) become fully owned by the employee over time. **The 4-year cliff-vest:** The most common structure in US tech: - **1-year cliff**: No equity vests until the 12-month mark. If you leave before 12 months, you receive nothing. - **Year 1**: At the 12-month mark, 25% of your total grant vests immediately - **Years 2-4**: The remaining 75% vests in equal monthly or quarterly installments - **Result**: After 4 years, 100% of your original grant is vested **Why cliffs exist:** The cliff protects the company from hiring mistakes. If someone is a poor fit, they leave (or are let go) before the cliff, taking no equity with them. **Accelerated vesting:** Some employment agreements include acceleration provisions: - **Single-trigger**: All unvested equity vests upon acquisition or IPO - **Double-trigger**: Unvested equity vests only if you're terminated after a triggering event (more common) **Refresher grants:** At large tech companies, annual equity refresher grants are common for employees who've been there 2+ years. These create overlapping vesting schedules that incentivize retention ('golden handcuffs'). **Comparing vesting across offers:** Always annualize equity grants when comparing offers. A $200,000 RSU grant vesting over 4 years is $50,000/year, but with a 1-year cliff, you have $0 in year 1 until the cliff vests. **'Vested in' vs. 'cliff':** Some offers use 'monthly vesting from day one' without a cliff. This is more employee-friendly and increasingly common at candidate-strong companies.