Vesting is the process by which someone earns their equity over time or by hitting milestones, instead of owning all of it at once. Until equity vests, the company can usually take back the unvested portion if the person leaves.

Vesting is foundational for founders and for hiring. It keeps a co-founder who walks away early from keeping a full stake, and it gives employees a reason to stay.

The four-year, one-year-cliff standard

The standard schedule is four years with a one-year cliff. Nothing vests during the first year. At the one-year mark, 25% vests in a lump, the cliff, and the rest vests monthly over the following three years. The cliff protects the company from granting equity to someone who does not last.

Single vs. double-trigger acceleration

Acceleration changes the timing on an exit or termination. Single-trigger accelerated vesting vests equity on one event, such as an acquisition. Double-trigger acceleration, the more common founder and executive term, requires two events, typically an acquisition and a termination without cause soon after. Double-trigger balances protection for the person with flexibility for an acquirer.

Vesting and your equity plan

Founders usually pair vesting on founder stock with an 83(b) election filed within 30 days, because the stock is cheap at grant. Vesting also shapes the cap table and governs most equity compensation over time. This is a general explanation, not legal advice.