Cliff Vesting (Accelerated Vesting Schedule)
A vesting schedule that includes an initial waiting period before equity begins to vest, often with acceleration provisions.
Definition
Cliff vesting combines a waiting period (cliff) with ongoing vesting thereafter. The cliff ensures commitment while subsequent monthly/quarterly vesting rewards continued participation. Acceleration provisions may allow faster vesting in specific circumstances like company sale or involuntary termination.
Common Structures
Standard 4-Year/1-Year Cliff: 25% vests after year 1, remaining 75% monthly over years 2-4
Single Trigger Acceleration: Vesting accelerates upon company sale/merger
Double Trigger Acceleration: Requires both sale AND termination for acceleration
Example
Founder Cliff Vesting: Founder has 4-year vesting with 1-year cliff and double-trigger acceleration. If company sells after 2 years AND founder is terminated, remaining 2 years accelerate immediately. If only sale occurs with no termination, normal vesting continues.