Cliff
Definition
A mandatory waiting period before any equity vests. The standard cliff is 1 year. During the cliff period, zero shares vest. Once you pass the cliff date, a large chunk (usually 25% of the total grant) vests all at once. After the cliff, vesting continues on a regular schedule (typically monthly or quarterly).
Real-World Example
You start a new job on January 1, 2025, with a 4-year vesting schedule and 1-year cliff. If you quit on December 15, 2025 (11.5 months), you get zero equity. If you stay until January 1, 2026, you get 25% of your grant. Each month after that, an additional ~2.08% vests.
Common Mistake
Not negotiating the cliff when joining a company that has already been around for years. If the company is 3 years old and clearly not going to fold, a 1-year cliff may be unnecessary. Some candidates successfully negotiate shorter cliffs or immediate vesting of a portion.
Why It Matters
The cliff is a trial period for equity. It protects companies from giving equity to short-tenure employees. But it also means your first year is the riskiest: you work for a year with zero equity safety net.
Related Terms
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