What is a vesting schedule?
A vesting schedule sets out when you earn the right to the shares or options in a grant. Until shares vest, you generally cannot sell or keep them if you leave. Vesting is the mechanism companies use to reward long-term commitment, so understanding your schedule tells you what you would give up by leaving on any given day.
Cliff vesting explained
A cliff is an initial period during which nothing vests. The most common arrangement is a four-year schedule with a one-year cliff: no shares vest for the first 12 months, then 25% vest on the first anniversary, and the remainder vest in equal monthly or quarterly instalments over the next 36 months. Leave before the cliff date and you walk away with nothing.
Common vesting structures
| Structure | How it works | Typical use |
|---|---|---|
| 4 years, 1-year cliff, monthly | 25% at 12 months, then 1/48th each month | Start-ups, tech companies, EMI options |
| 4 years, no cliff, annual | 25% each year on the anniversary | Large listed companies, RSUs |
| 3 years, cliff vesting | 100% on the third anniversary | Performance share plans, LTIPs, UK SIP matching shares with a forfeiture period |
| Back-loaded (e.g. 5/15/40/40) | More shares vest in later years | Some large US technology companies |
How this calculator works
The calculator divides your grant into equal tranches based on the vesting frequency, then applies your cliff. If a cliff is set, any tranches that would have vested before the cliff date are released together on the first vesting date on or after the cliff. It compares every vesting date with today’s date to show how much has vested so far and what that is worth at the current price.
Vesting is not the same as tax
For RSUs, vesting is usually the moment income tax and National Insurance (UK) or ordinary income tax (US) become due. For options, tax typically arises on exercise, or on sale for EMI. See our share schemes comparison for how each plan taxes you.
Frequently asked questions
What does a one-year cliff mean?
Nothing vests until you have completed 12 months. On the cliff date, the first 12 months of vesting are released at once, and the remainder vests on the schedule after that.
What happens to unvested shares if I leave?
They are usually forfeited. Your grant agreement or plan rules will say whether any good-leaver provisions, accelerated vesting on a sale of the company or a post-termination exercise window apply.
Do vesting and exercising mean the same thing?
No. Vesting means you have earned the right to the shares or options. Exercising is the act of buying shares with options. RSUs are delivered as shares on vesting; options still need to be exercised.
What is accelerated vesting?
A clause that speeds up vesting on certain events, most commonly a sale of the company (single trigger) or a sale followed by termination without cause (double trigger).
Can I use this for RSUs, options and EMI?
Yes. The vesting maths is the same for any time-based grant. The tax treatment differs, so use our tax calculators for that.