Equity Vesting Explained: Cliffs, Schedules, and Acceleration
Equity is the part of your compensation that's supposed to make you rich if the company succeeds. It's also the part easiest to misunderstand and easiest to lose.
Cliff Vesting
Standard: 4-year vest with 1-year cliff. You get zero equity until you've been there 12 months. At your one-year anniversary, 25% vests. After that, the remaining 75% vests monthly or quarterly over three years. Leave before the cliff and you walk with nothing.
Acceleration Triggers
Single-trigger: equity vests on acquisition. Rare but valuable. Double-trigger: vests only if acquired AND you're terminated without cause within 12-18 months. More common at later-stage companies. Neither means an acquisition could wipe out unvested equity.
Exercise Windows
When you leave, you typically have 90 days to exercise vested options by paying the strike price out of pocket. Can't afford it? You forfeit them. Some companies offer 5-10 year extended windows — worth asking for.
ISO vs NSO
ISOs can qualify for capital gains treatment if held long enough. NSOs taxed as ordinary income on exercise. The difference can be tens of thousands. Talk to a CPA before exercising significant amounts.
Have a lease in front of you right now?
Upload it. Our AI flags every red flag mentioned in this guide — in under 10 seconds.
Decode My LeaseFrequently asked questions
What if the company never goes public?
Your equity might be worth zero. Treat startup equity as a lottery ticket, not a retirement plan.