Vesting Schedule

Definition

The timetable governing when an employee or founder earns the right to exercise stock options or own shares outright, typically structured with a one-year cliff (no vesting until 12 months of service) followed by monthly or quarterly vesting over a three to four year total period. Vesting schedules are a primary retention mechanism in equity-backed businesses, aligning individual incentives with long-term value creation while protecting the company and other shareholders from early departures.