Vesting Schedule Calculator

A vesting schedule determines when you gain ownership of your equity compensation over time. Most tech companies use a 4-year vesting schedule with a 1-year cliff, meaning you vest 25% after your first year and then continue vesting monthly or quarterly for the remaining 3 years. This incentivizes employees to stay longer and aligns their interests with the company.

A cliff is a waiting period before any equity vests. With a typical 1-year cliff, you receive no shares until your one-year anniversary, at which point 25% vests all at once. If you leave before the cliff, you forfeit all unvested equity. After the cliff, remaining shares typically vest monthly or quarterly.

Amazon uses a backloaded 5/15/40/40 vesting schedule, meaning only 5% vests in year 1, 15% in year 2, and 40% in each of years 3 and 4. This incentivizes longer tenure. However, Amazon compensates with cash signing bonuses in years 1-2 to maintain competitive total compensation. Other companies generally use equal 25/25/25/25 schedules.

Unvested equity is typically forfeited when you leave a company, whether you quit, are laid off, or are terminated. This is a significant consideration when evaluating job changes. Some companies offer accelerated vesting in certain circumstances (acquisition, death, disability) or may negotiate vesting acceleration as part of a severance package.

While both can use similar vesting schedules, there are key differences. RSUs automatically convert to shares when vested - you don't need to do anything. Stock options require you to actively exercise (purchase) them using the strike price. Options also have an expiration date (usually 10 years), while RSUs don't expire once vested.

Double-trigger vesting is common at private companies. It requires two events before shares vest: (1) time-based vesting completion AND (2) a liquidity event like an IPO or acquisition. This means even if your time-based vesting completes, you can't access shares until the company goes public or is acquired. At public companies, single-trigger (time-only) vesting is standard.