What is a vesting schedule?

The timetable that specifies when options Vest, or become exerciseable. A typical vesting schedule is 25% per year on the anniversary of the grant date. That means that after one year up to 25% percent of the options granted may be exercised; after two years, up to 50%; after three years, up to 75%; after four years, all of the grant.

As another example, Cliff vesting describes a vesting schedule in which all options become exerciseable on a single date.

Performance-based Vesting and Reverse Vesting are other examples of vesting schedules.

 
Have A Different Definition?

Want to enhance or revise the definition for this term?
Please submit your suggested change/improvement to our editorial board.