RSU Vesting Schedules Explained

What a vesting schedule actually is

A grant is a promise. A vesting schedule is the timetable that converts pieces of that promise into shares you actually own, conditional on staying employed through each stage. Nothing is yours until it vests — a $400,000 grant that you leave four months after receiving, before any of it has vested, is worth exactly zero. This is the mechanic that makes equity a retention tool as much as a compensation tool, and it's why the shape of the schedule matters as much as the headline dollar figure.

Every vesting schedule is defined by two things: a cadence (how often tranches vest — annually, quarterly, or monthly) and a shape (what percentage vests at each interval). A cliff, where it exists, is a special first interval during which nothing vests at all. None of these are standardized. Two offers both described as “four-year vesting” can pay out on completely different curves.

The four shapes you'll actually see

Even (graded) vesting — 25/25/25/25

The simplest shape: an equal quarter of the grant vests at the end of each year. On a $400,000 grant, that's $100,000 per year, every year, for four years. It's easy to reason about and it's the shape most people picture when they hear “four-year vesting,” but it is not the most common shape at large technology employers — front-loaded and back-loaded schedules are both more common in practice, for reasons that cut in opposite directions.

Front-loaded vesting — for example 40/28/20/12

More value vests early, less later. On the same $400,000 grant: $160,000 in year one, $112,000 in year two, $80,000 in year three, $48,000 in year four. This shape is attractive to a new hire specifically because it de-risks the first year or two — you're not betting four years of patience on a job you've had for one month. It's also, not coincidentally, a shape some employers use for exactly that reason: it makes an offer look larger in year one, which is the number most candidates anchor on when comparing offers.

Back-loaded vesting — for example 5/15/40/40

The mirror image: $20,000 in year one, $60,000 in year two, $160,000 in year three, $160,000 in year four, on the same grant. This is a retention mechanic, plainly stated — the cost of leaving climbs sharply in years three and four, which is exactly when an employer most wants to discourage it. If you're evaluating an offer with this shape, the honest comparison point isn't year-one total compensation; it's whether you're actually planning to stay three-plus years, because that's the horizon this shape is priced for.

Even five-year vesting — 20/20/20/20/20

Less common for initial grants, more common for certain senior or specialized roles, and occasionally used to make a headline grant number look larger while actually paying out more slowly per year than a four-year even schedule would. $400,000 over five years even is $80,000 a year — noticeably less annually than the same dollar amount over four years, despite the larger total.

The one-year cliff, specifically

A cliff is a period at the start of a vesting schedule during which nothing vests at all, followed by a lump vest once the cliff date is reached. The standard pattern pairs a one-year cliff with monthly vesting after: 25% vests exactly at the twelve-month mark, and the remaining 75% vests in equal monthly installments over the following three years.

The consequence that matters most: leaving before the cliff date forfeits the entire grant, not a prorated share of it. Someone who leaves at month eleven walks away with nothing from that grant. Someone who leaves at month thirteen has already vested a full quarter of it. That one-month difference is worth 25% of a multi-hundred-thousand-dollar grant, which is why the exact cliff date — not just “one year” as a rough description — is worth getting in writing.

Cliffs exist for an obvious reason: they protect the employer from paying out equity to someone who leaves almost immediately. They're close to universal on initial grants at large technology employers and far less consistent on refresher grants, which sometimes carry no cliff at all since the recipient is, by definition, already a proven retained employee.

Quarterly and monthly vesting, and why the granularity matters

Annual vesting is the easiest to model and the easiest to describe, but a meaningful share of real offers vest quarterly or monthly after an initial cliff — smoother income, but also more vest events to track, and more vest-date share prices that determine what each tranche is actually worth. A grant that vests monthly has forty-eight separate vest dates over four years, each priced independently at whatever the stock happens to be worth that day. Annual vesting has four. Both pay out the same total share count on the same schedule shape; the difference is how smoothly that income arrives and how much any single day's share price can matter to any single tranche.

Vesting schedule vs. refresher schedule — not the same thing

A vesting schedule describes how one grant pays out over time. It does not automatically apply to grants made later. A refresher — an additional grant issued on top of your initial one, typically annually — is a separate grant with its own grant date and, frequently, its own schedule and its own cliff (or no cliff at all). Assuming your refreshers inherit your initial grant's schedule is a common and costly modelling mistake. Confirm each grant's terms independently. The mechanics of how multiple grants with different schedules and different start dates overlap — and why that overlap is the thing most compensation spreadsheets get wrong — is the entire subject of the RSU refresher calculator.

First-vest timing: grant year, or the year after?

One more detail that's easy to assume incorrectly: does the first tranche of a schedule vest in the grant year, or one year after the grant date? Both conventions exist. Most new-hire grants use the latter — nothing vests in year one of employment, and the first tranche lands at the one-year mark — but some plans, and some legacy compensation spreadsheets, use the former. This single toggle shifts an entire multi-year projection by exactly one year and changes no dollar amounts, which makes it easy to get wrong silently: the totals still add up, they're just all labelled one year off. Confirm which convention your actual offer letter uses rather than assuming.

How to read your own offer letter

Templates are useful for understanding shapes, not for substituting your own numbers. When you have an actual offer or grant letter in hand, look for four specific things: the total grant value or share count, the vesting commencement date (which is not always the same as your start date), the cliff length if any, and the vesting cadence after the cliff. If any of these four aren't stated explicitly, ask — a vague “standard four-year vesting” description in an offer letter could mean any of the shapes above, and the difference between them is real money in specific years, not a rounding error.

Worked comparison: the same $400,000 grant, four ways

All four rows sum to $400,000 and assume 0% share price appreciation, so the only variable is timing. Add price appreciation, a refresher policy, and a real vesting-commencement date, and the differences compound — which is what the calculators below are for.

Frequently asked questions

Ready to put real numbers behind one of these shapes? Model a single refresher policy in the RSU refresher calculator, or compare a full offer — base, bonus, sign-on and equity together — in the main compensation calculator.