Vesting means ownership of granted equity or benefits unlocks over time or when conditions are met. A four year schedule with a one year cliff is a common pattern in start ups: leave early and you may keep little or nothing of the grant. Once vested, the rights are yours under the plan rules.
Key takeaways
- Unvested awards are usually lost if you leave before they unlock, subject to the plan terms.
- Vesting aligns staff incentives with staying and helping the company grow.
- Tax treatment of vesting events varies by country and plan design.
- Always read the grant letter. Informal promises are not a substitute for the written schedule.