A vesting schedule is the timeline over which stock options or RSUs granted to an executive become fully owned. The standard schedule in growth-stage technology companies is a 4-year vest with a 1-year cliff: 25% of the grant vests at the 12-month anniversary, and the remaining 75% vests in equal monthly or quarterly instalments over the following three years. The schedule protects both the company and the executive by tying ownership to tenure.
How Vesting Schedules Work
When an executive receives an equity grant, they do not immediately own the shares or options. Instead, ownership accumulates over the vesting schedule. Under the standard 4-year / 1-year cliff structure, an executive who leaves before their 12-month anniversary forfeits the entire grant. After month 12, they own 25% and accumulate the rest ratably thereafter.
Vesting schedules serve two purposes: they incentivise executives to stay long enough to contribute meaningfully, and they protect the company from issuing large equity blocks to leaders who exit quickly. For executives, understanding the vesting schedule at both their current employer and a prospective one is essential for evaluating any offer.
Grant date
The date the equity is formally awarded. The vesting clock starts here.
Cliff
The minimum tenure required before any equity vests. Typically 12 months. Leaving before the cliff = forfeit of the entire grant.
Vesting period
The full duration over which the grant vests. Typically 4 years for tech companies.
Acceleration
Provisions that speed up vesting on specific events: acquisition (single-trigger) or acquisition + termination (double-trigger).
Standard vs Variable Vesting Schedules
Variations in Vesting Structures
While the 4-year / 1-year cliff is the standard, variations exist. Some early-stage startups use 3-year vesting to attract candidates in competitive markets. Some later-stage companies use back-weighted schedules (where more equity vests in years 3 and 4) to incentivise longer retention. Performance-based vesting ties equity release to specific milestones rather than time.
Accelerated vesting provisions are common in executive packages: single-trigger acceleration releases equity on a change of control event (acquisition); double-trigger requires both a change of control and termination without cause. These provisions significantly affect the value of an equity grant and are often negotiated at the offer stage.
“The vesting schedule is the most underestimated term in an executive offer. Candidates know what their current unvested equity is worth. If the new grant doesn't account for what they're leaving behind, the offer loses — even if the headline numbers look competitive.”
Vesting in the Context of Executive Hiring
In executive search, vesting schedules are central to offer construction and counter-offer management. When a candidate's unvested equity at their current employer is significant, the hiring company must account for this in the offer — either through a sign-on bonus, a larger grant, or accelerated vesting on the new grant.
Majhi Group maps the candidate's vesting position at their current employer during the offer phase of every search. Understanding what they are leaving behind, and when it would have vested, determines whether the offer closes or gets countered out.