Vesting
Definition
The process by which an employee or founder earns full ownership of equity over time, typically over a 3-4 year schedule. Vesting aligns long-term incentives with commitment and usually includes a cliff period (often 12 months) before any equity vests.
Related Terms
Related FAQ
What is an option pool and why do founders care?
An option pool is a reserved block of shares (typically 10-20% of fully diluted equity) set aside for employee options. The size of the pool affects how much founders must dilute to hire team members.
Read full answer →What is vesting and cliff in equity compensation?
Vesting is the gradual earning of equity over time (typically 4 years). A cliff is a waiting period (usually 1 year) before any equity vests — protecting the company from employees leaving immediately with full grants.
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