Vesting Schedule

## Vesting Schedule

A vesting schedule determines when employees earn full ownership of employer-provided equity or retirement contributions. Unvested benefits are forfeited if the employee leaves the company before the vesting date.

### Common Structures

| Type | Description |
|------|-------------|
| 4-year with 1-year cliff | Nothing for 12 months, then 25% vests, remainder monthly |
| 4-year monthly | Equal monthly vesting over 48 months |
| 3-year cliff | 100% vests after 3 years |
| Graded 6-year | 20% per year starting year 2 |

### Impact on Total Compensation

Vesting is critical when evaluating job offers. A $400,000 RSU grant with 4-year vesting adds $100,000/year to total compensation, but only if you stay the full 4 years. Leaving after 2 years means forfeiting $200,000.

### Acceleration

- **Single trigger**: Full vesting on acquisition of the company.
- **Double trigger**: Full vesting only if acquired AND terminated.
- **Negotiated**: Senior hires may negotiate accelerated vesting in their offer.

### Refresher Grants

Companies often issue additional equity grants annually to retain employees whose initial grants are partially vested. Refresher grants create overlapping vesting schedules that increase the cost of leaving.