Vesting should not be confused with time to exercise. The one-year cliff was created to protect companies against issuing stock to bad hires, which typically are not recognized at least until at least a few months into their tenure. For example if you leave two years into your employment, you would earn the right to exercise 1/2 your options. In other words on your one-year anniversary you earn 1/4 th of your stock and then vest an additional 1/48 th per month thereafter. That means you earn the right to 1/48 th of the shares you were originally granted per month over four years (48 months), but you don’t get anything if you leave prior to your one-year anniversary (and go over the cliff).
The most common form of vesting in Silicon Valley is monthly over four years with a one-year cliff. Vesting refers to the process by which an employee earns her shares over time. Before we analyze what vesting schedule is appropriate and how it can affect you, we need to provide a little background on why vesting came to be associated with stock options and RSUs. That’s why the topic of vesting deserves a deeper dive than our discussion in The 14 Crucial Questions About Stock Options. Most people don’t realize it, but your vesting schedule has an enormous impact on the potential value of your equity package. Editor’s note: Interested in learning more about equity compensation, the best time to exercise options, and the right company stock selling strategies? Read our Guide to Equity & IPOs
0 kommentar(er)
