Vesting

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Vesting refers to the process by which an employee earns her shares over time. The most common form of vesting in Silicon Valley is monthly over four years with a one-year cliff. That means you earn the right to 1/48th of the shares you were originally granted per month over four years (48 months), but you don’t get anything if you leave prior to your one-year anniversary (and go over the cliff). In other words on your one-year anniversary you earn 1/4th of your stock and then vest an additional 1/48th per month thereafter. For example if you leave two years into your employment, you would earn the right to exercise 1/2 your options.

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