Vesting and cliff
Also known as: Vesting schedule, Cliff vesting, Equity vesting
Vesting is the schedule by which equity grants become the employee's to keep — typically over four years, with monthly release after a one-year "cliff" during which nothing vests. If the employee leaves before the cliff, they walk away with zero equity; after the cliff, they keep what has vested so far.
Vesting solves the alignment problem in equity compensation: a grant given on day one with no strings would let an employee leave on day two with full ownership. The standard solution — popularized by Silicon Valley in the 1990s and now near-universal — is a 4-year vesting schedule with a 1-year cliff. The cliff protects both sides: the company doesn't hand equity to someone who turns out to be wrong for the role, and the employee gets a clear "stay this long to keep anything" target.
The standard schedule
Most modern equity grants vest over 4 years with a 1-year cliff and monthly vesting thereafter. Concretely: nothing vests for the first 12 months. At the 12-month mark, 25% of the grant vests in a single chunk. From month 13 onward, an additional 1/48 of the original grant vests each month. By month 48, the entire grant has vested.
Common variations
- Standard: 4 years, 1-year cliff, monthly thereafter — the SV default
- 5 years vesting (e.g., Snap, Lyft) — slower vesting, retention play
- 3-year vesting (some EU companies) — faster vesting, recruitment edge
- No cliff for senior hires — early executives sometimes negotiate this
- Double-trigger acceleration — on acquisition + termination, all unvested shares vest
- Single-trigger acceleration — on acquisition alone, all unvested shares vest (rare, founder-favored)
What happens on departure
Before the cliff: zero. After the cliff: keep what has vested up to the last day worked. Unvested shares return to the option pool. Most companies require option holders to exercise their vested options within a defined window after leaving (often 90 days, increasingly extended to 1+ years to avoid forcing departed employees to pay strike + tax immediately). RSUs that have vested are kept regardless; unvested RSUs are forfeited.
Frequently asked questions
- What is vesting?
- The schedule by which equity grants become the employee's to keep. Standard: 4 years total, 1-year cliff (nothing vests in year one), monthly vesting after that.
- What is a cliff?
- A defined period at the start of vesting during which nothing vests. If the employee leaves before the cliff date, they walk away with zero equity. One year is standard.
- What happens to unvested shares when you leave?
- They return to the company's option pool. Vested shares (or vested options, after exercise) are kept regardless.
- Can I negotiate a shorter cliff?
- Senior hires sometimes negotiate no cliff. Most companies hold the line for typical hires — the cliff is structural protection, not a negotiation lever.