Stock Options Vesting Schedule

Vesting is the mechanism by which equity compensation becomes yours over time. Standard vesting is 4 years with a 1-year cliff: you earn nothing for 12 months, then 25% of your grant vests, followed by monthly/quarterly vesting of the remaining 75% over 3 years. You can't exercise options until they vest; unvested options are forfeited if you leave. Understanding vesting is critical for employees: it affects retention incentives, departure decisions, and financial planning. For founders and executives, designing vesting schedules is an important tool for aligning incentives and managing equity. Equity compensation is increasingly common; understanding vesting mechanics is table stakes for knowledge workers. A poorly-negotiated vesting schedule can cost you hundreds of thousands of dollars. For founders, employees, and HR, understanding vesting prevents costly misunderstandings and disputes. It's also simple to understand—this skill has low barrier to entry but high impact on career and financial decisions.