What are cliff vesting options?

Cliff vesting options provide the holder the option (but not the obligation) to acquire the shares of a company at a specified strike price. In essence, they have the same attributes as regular options with one exception: they all vest, or "cliff," at a specific time rather than the vesting period being amortized over the life of the term.

What is a cliff investment plan?

Typically, plans have a four-year vesting schedule plan with a one-year cliff. Upon completing the cliff period, the employee receives full benefits. Other plans might release benefit amounts over another scheduled period. Cliff investing is a way for companies to incentivize employees when they are first hired.

What is a cliff in stock options?

Think of a cliff as the probation period which gives the company time to see how an employee performs, before they receive any equity. In the case of stock options, this means that an employee must remain with a company in order to start exercising.

What is a 1 year Cliff?

The "1-year cliff" refers to the initial period where the employee has to stay for a year before their stock options begin to the four year vesting period. After the cliff period, vesting typically occurs on a pro-rata basis, meaning that a percentage of the equity would vest gradually over time.