Glossary
Definition
Vesting
The process by which an employee gradually earns rights to equity or benefits over time.
Vesting is a schedule that determines when an employee gains full ownership of equity awards (stock options, RSUs). A typical 4-year vesting schedule with a 1-year cliff means nothing vests in the first year, 25% vests at the end of year 1, then the remainder vests monthly or quarterly over the following 3 years. Vesting aligns employee interests with long-term company performance.
Frequently Asked Questions
What happens to unvested shares when you leave a company?
Unvested shares are typically forfeited when an employee resigns or is terminated. Some companies offer accelerated vesting upon an acquisition (single trigger) or upon acquisition followed by termination (double trigger).