4 Years with a One Year Cliff defined: 4 years with a one year cliff represents the typical vesting schedule for stock options or restricted stock (see definition), whether for startup founders’ stock (if they raise Venture Capital) or for executives or employees granted Stock Options (see definition). Stock Option recipients will vest their shares over a total period of four years. The one year cliff means that the recipient will not get vested with regards to any shares until the first anniversary of the founders stock issuance. Upon the one-year anniversary, the receipt will each vest 25% of their total stock options or shares. Vesting will then occur proportionately on a monthly after the 1-year cliff expires.
Above is a definition for “4 Years with a One Year Cliff” from PrivCo’s Private Company Knowledge Bank, the definitive online and e-book guide to private companies and private company deals.
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