How to Build an Equity Vesting Schedule
Vesting is the retention engine behind every equity grant. Get the cliff, the term, and the acceleration terms right and equity does its job; get them wrong and you either fail to retain or give away too much too soon.
The building blocks of a vesting schedule
A vesting schedule sets when granted equity is earned. The standard startup template is four years with a one-year cliff and monthly vesting thereafter, but the right choice depends on the role, the instrument, and how you want to handle departures and acquisitions. The parameters that matter are the total term, the cliff, the vesting frequency, and any acceleration triggers.
| Parameter | Typical choice | Why it matters |
|---|---|---|
| Total term | 4 years | Retention horizon for the grant |
| Cliff | 1 year | No vesting before the cliff protects against early departures |
| Frequency | Monthly after cliff | Smooths vesting; quarterly is also common |
| Acceleration | Single or double trigger | Governs vesting on acquisition or termination |
Acceleration terms explained
- Single-trigger acceleration: some or all vesting accelerates on a change of control
- Double-trigger acceleration: vesting accelerates only if there is a change of control and the employee is terminated without cause
- Cliff acceleration: the unvested cliff can vest on certain qualifying events
- Founder acceleration is often more generous than employee acceleration - model both
A worked example
- 1Choose the total term and cliff appropriate to the role.
- 2Set the vesting frequency after the cliff.
- 3Decide acceleration terms and model their exit impact.
- 4Document the schedule in the grant and the cap table.
- 5Track vesting continuously so exercise windows and forfeitures are accurate.
How Fintra tracks vesting
Fintra attaches a vesting schedule to every grant on the cap table and computes vested and unvested amounts continuously - including cliffs, custom frequencies, and acceleration triggers. Because vesting feeds ASC 718 expense, dilution modeling, and option exercise, tracking it accurately in one place keeps your expense and your ownership numbers right without manual spreadsheets.
- Per-grant schedules with cliffs, custom frequency, and acceleration
- Continuous vested vs unvested tracking, no month-end recompute
- Feeds ASC 718 stock-comp expense automatically
- Drives accurate exercise windows and forfeiture on departure
Frequently asked questions
What is a standard startup vesting schedule?
Four years with a one-year cliff and monthly vesting thereafter is the common template: 25% vests at the one-year mark, then the remainder vests monthly over the following three years. The right schedule still depends on the role and instrument.
What is the difference between single- and double-trigger acceleration?
Single-trigger accelerates vesting on a change of control alone. Double-trigger accelerates only if there is a change of control and the employee is terminated without cause. Double-trigger is more common for employees because it aids retention post-acquisition.
Does vesting differ for RSUs and options?
The schedule mechanics are similar, but RSUs often carry a settlement condition and different tax timing, while options vest into a right to exercise at the strike price. Track both against their own schedules to keep tax and expense correct.
Why does accurate vesting tracking matter for accounting?
Vesting drives ASC 718 stock-comp expense recognition and affects dilution and exercise. If vested amounts are wrong, your expense, your cap table, and your exercise windows all inherit the error.
Stay in the loop
One practical finance briefing a week - new guides, checklists, and benchmarks.
Track every vesting schedule automatically
Cliffs, acceleration, and expense from one record.
Talk to us