Vesting — What is it? Rights Accrual Schedule
What is vesting and vesting schedule? How does the cliff work, how long does standard vesting last, and why is it important for stock options and RSU.
Definition
Vesting is the process of gradually acquiring rights to assets (usually stock options or RSU) by an employee. A vesting schedule determines when and how much equity "unlocks" — becomes your property.
Standard vesting schedule
The most common model is 4 years with a 1-year cliff:
- Cliff (1 year) — for the first year you get nothing. After 12 months, 25% of the total unlocks
- Months 13-48 — each month an additional 1/48 (about 2.08%) unlocks
- After 4 years — you have 100% of the granted options/shares
Example: You received 12,000 options with 4-year vesting and a 1-year cliff:
- After 1 year: 3,000 options
- After 2 years: 6,000 options
- After 3 years: 9,000 options
- After 4 years: 12,000 options
Types of vesting
Time-based vesting
Most popular — options unlock over time. The only condition: you work at the company.
Milestone-based vesting
Options unlock after achieving specific goals (e.g., company revenue, project completion). Common in early-stage startups.
Reverse vesting
You get all shares immediately, but the company can buy them back (at a low price) if you leave before the vesting period ends. Mainly used for founders.
Cliff — why is it there?
The cliff protects the company from situations where someone leaves after 2 months with part of the equity. A one-year cliff means: if you don't work for a year — you get nothing.
What happens when you leave?
- Vested options — They're yours. Usually you have 90 days to exercise them
- Unvested options — You lose them. They return to the company pool
- Termination without cause — some agreements provide for vesting acceleration
- Change of control (acquisition) — single trigger or double trigger acceleration
Vesting acceleration
- Single trigger — all vesting accelerates upon company acquisition
- Double trigger — vesting accelerates if the company is acquired AND the employee is terminated
Vesting in Poland
In Polish startups and tech companies, vesting is becoming standard. Most commonly used structures:
- ESOP (Employee Stock Option Plan) in a spółka z o.o. or S.A.
- Subscription warrants (warranty subskrypcyjne)
- Option agreements (phantom shares — virtual equity)
For Polish employees, it's important to understand tax implications. When you exercise options or receive shares, you may need to pay PIT (personal income tax) on the difference between exercise price and fair market value. Consider consulting with a Polish tax advisor who understands equity compensation.
Companies often structure vesting to optimize for Polish tax law, sometimes using deferred tax models or specific timing around ZUS (social security) contributions.
How Freenance can help
Freenance allows you to track your vesting schedule and see how much equity you have already unlocked and how much is waiting. This helps you plan your finances and make job change decisions with full awareness of what's at stake.
When tracking your equity compensation in PLN terms, Freenance helps you understand the true value of your vested options, accounting for currency fluctuations if your company is valued in USD or EUR.
Want full control over your finances?
Try Freenance for free