For employees of startups, a standard vesting schedule for equity awards such as stock or stock options is four years with a one-year cliff. The “cliff” refers to the minimum period of time the employee needs to work to earn any of the shares. With a one-year cliff, no stock vests until the employee’s one-year anniversary with the company, at which point a pre-determined percentage (usually 25%) of the stock vests all at once. Following the one-year cliff, the remaining stock will then vest in equal monthly increments for the next 36 months.
If the employee leaves the company after having worked for only 11 months, the employee will not have the right to retain any stock, as the employee has not yet hit the one-year cliff. If the employee leaves after having worked at the company for two years (24 months), the employee would keep 50% of the stock (two years worked out of the four-year vesting period).
For advisors, a typical vesting schedule is one or two years (12 or 24 months) with no cliff. This means that the stock vests in equal monthly increments over 12 or 24 months. With a 24-month vesting schedule, if the advisor ceases to provide services to the company after 11 months, the advisor would keep 11/24ths of the stock.