Vesting

How it is used

A common standard is four years with a one-year cliff: nothing vests in the first year, then 25 percent vests at once and the rest monthly. People say shares vest, vesting schedule, fully vested and accelerated vesting (faster vesting, for example after an acquisition).

Example sentences

1. All four founders agreed to four-year vesting with a one-year cliff.

2. He left after eight months, before his vesting cliff, so he kept no shares.

Common collocations

• vesting schedule
• four-year vesting
• one-year cliff
• fully vested
• accelerated vesting

Related terms

• stock optionThe right to buy a number of company shares later at a fixed price, often given to startup employees so they can share in the company's success.
• founders' agreementA written contract between co-founders that sets out who owns what, who does what, how decisions are made and what happens if someone leaves.
• co-founderOne of two or more people who start a company together and share the ownership, the work and the main decisions from the beginning.
• option poolA part of a company's shares set aside for future employees, advisors and other team members, usually granted as stock options.
• equityOwnership in a company, divided into shares. In startups, equity is what founders, employees and investors hold, and its value grows if the company succeeds.

More terms: Equity & Valuation

• valuation
• stake
• cap table
• dilution
• pre-money valuation
• post-money valuation
• down round
• liquidation preference
• sweat equity