Vesting Schedule
The timeline over which an employee earns their equity grant. The most common structure is 4 years with a 1-year cliff — meaning no equity is earned in year 1, then 25% vests at 12 months, with monthly or quarterly vesting for years 2-4.
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.
Why it matters
The vesting schedule determines when your equity is actually yours. Leaving before the cliff forfeits 100% of your equity; leaving just before the annual refresh costs you a significant portion of the intended annual value.
Candidate tip
Calculate the 'golden handcuff' effect of your equity package before accepting: map out when major chunks vest and ask yourself how long you'd realistically need to stay to capture the full intended value — then decide if that timeline works for you.
Related terms
Equity (Job Offer)
Offers & NegotiationOwnership stake in the company provided as part of compensation — typically as stock options or RSUs. Equity can be worth far more than base salary at successful companies, but it carries risk and illiquidity, particularly at private companies.
RSU (Restricted Stock Unit)
Offers & NegotiationA type of equity compensation that grants you a set number of company shares that vest over time. At vesting, the shares become yours to hold or sell. Common at public tech companies. Taxed as ordinary income at vest.
Stock Options
Offers & NegotiationThe right to purchase company stock at a predetermined price (the strike price) at some future time. Common at startups. Options have value when the stock price rises above the strike price — but are worth nothing if the company doesn't grow or exit.
Signing Bonus
Offers & NegotiationA one-time cash payment made at the start of employment, used to attract candidates or compensate for benefits being left behind. Often comes with a clawback clause requiring repayment if you leave within 12-24 months.