A vesting schedule answers a practical startup question: when do promised stock options actually become yours? It sets the timeline for turning an option grant into an unconditional right to shares. section 21.4.2
The typical arrangement works like this:
- The grant vests over four years, so full vesting takes four years. section 21.4.2
- A one-year cliff means nothing vests during the first year; at the anniversary, the first quarter of the grant vests. section 21.4.2
- After the cliff, 1/36 of the total grant vests each month. section 21.4.2
- Recipients may exercise vested shares until the grant expires; the cliff discourages short stays without meaningful contribution. section 21.4.2
A four-year grant
Leave before the first anniversary and nothing has vested. Reach the anniversary and one-quarter vests. Remain for another three years and the remaining grant vests monthly. section 21.4.2
