What are equity vesting schedules?
An example of an AI chatbot conversation about equity vesting schedules.
What are equity vesting schedules?
Equity vesting schedules determine when employees earn their stock options or shares over time. They incentivize long-term commitment.
How do these schedules typically work?
Typically, vesting schedules can be time-based, performance-based, or a combination. A common model is a four-year vesting with a one-year cliff.
What is a one-year cliff?
A one-year cliff means that employees must work for a full year before any of their equity vests. After that, it vests gradually.
Why are vesting schedules important for companies?
Vesting schedules help retain talent, align employee interests with company performance, and manage equity distribution effectively.
Can you give an example of a vesting schedule?
Sure! A common example is 25% of shares vesting after the first year, with the remaining 75% vesting monthly over the next three years.
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