Vesting, cliffs, and what “vested” really means

The common arrangement is four years with a one-year cliff. Nothing vests for the first twelve months; at the anniversary, a quarter vests at once; the rest accrues in monthly or quarterly instalments over the remaining three years.

The cliff exists to make the first year all-or-nothing. Leave at month eleven and you keep nothing from that grant. Leave at month thirteen and you keep more than a quarter of it. It is the single largest discontinuity in most equity packages, and it is why your dashboard can look unchanged for a year and then jump.

For options, vesting means you are now allowed to buy those shares at your strike price. You do not hold them yet — exercising is a separate step that costs money. An option can be fully vested and still represent nothing you own.

For RSUs, vesting is closer to ownership, but many private companies use double-trigger vesting: time served is only the first condition, and shares are not delivered until a second event such as an acquisition or IPO. Time-vested RSUs at a private company can sit indefinitely in that half-state.

And in every case, being able to sell is a separate question again, governed by transfer restrictions, company approval, and whether a buyer exists.

Vesting events are generated from your schedule — start date, cliff, total length, frequency — and share counts use cumulative rounding, so every event lands on a whole number and the final event brings the total to exactly your grant size. No fractional share drifts into the total.

All of it runs on calendar dates rather than timestamps, so a vest lands on the same day regardless of the timezone you happen to open the app in. Month-end and leap-day starts clamp to the end of the target month.