The definition
A vesting cliff is a waiting period at the start of an equity grant during which nothing vests. If you leave before the cliff date, you walk away with zero equity, no matter how close you were. Reach the cliff and a block of equity vests all at once, after which the remainder vests on a smoother schedule. The classic structure in tech is a four-year grant with a one-year cliff: 25 percent vests on your first anniversary, and the remaining 75 percent vests monthly or quarterly over the next three years.
The cliff exists to protect the company. It ensures that someone who joins and leaves within a few months does not walk off with a slice of the company. From the employee side it creates a hard date that materially changes your financial picture, which is why people talk about hitting their cliff as a milestone and why recruiters know the year-one mark is a moment when employees reassess.
How a cliff plays out in practice
Imagine a 200,000 four-year RSU grant with a standard one-year cliff. For the first twelve months, nothing vests. On day 366, 50,000 of equity vests in a single event, which is 25 percent of the grant. From then on, the remaining 150,000 vests in small increments, often monthly, until the grant is exhausted at the four-year mark. If you had left on day 360, you would have received nothing from this grant despite nearly a year of work.
Cliffs interact with refresh grants in a way that catches people out. Each new annual refresh grant typically has its own cliff. So in your second year you might be vesting the tail of your initial grant while waiting out the cliff on a fresh grant. Understanding which grants are past their cliff and which are not tells you how much equity is genuinely yours versus how much is still at risk if you leave.
Why the cliff matters when you change jobs
The cliff is the single biggest reason timing matters when you move. Leaving a few weeks before a cliff means forfeiting that entire tranche, while staying a few weeks longer can be worth tens of thousands. Before you accept a new role, calculate exactly what you would lose by leaving your current employer before your next vesting event, including any approaching cliff.
This forfeited equity is precisely what a signing bonus is designed to replace. When a new employer makes an offer, it is reasonable and common to ask for a signing bonus that bridges the unvested equity you are giving up, especially if you are walking away from an imminent cliff. Bring the actual number to the negotiation so the request is concrete and easy to approve.
Frequently asked questions
- What does a one-year cliff mean?
- It means you earn no equity for your first twelve months. On your first anniversary, the first portion of the grant, typically 25 percent of a four-year grant, vests all at once. After that, the rest vests gradually. If you leave before the one-year mark, you get nothing from that grant.
- Do all equity grants have a cliff?
- Most initial grants do, and the one-year cliff is the norm in tech. Some refresh grants vest without a cliff because you have already proven you will stay. Always read the specific vesting schedule in your offer, because schedules vary and some companies front-load or back-load vesting.
- What happens to unvested equity if I quit before the cliff?
- You forfeit all of it. This is the whole point of a cliff from the company's perspective. Because of this, the timing of a job move around your cliff and your next vesting event can be worth a large amount, and it is a key input when negotiating a signing bonus with a new employer.