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Equity isn't truly yours until it vests, and understanding your vesting schedule is critical to knowing what you actually own.
Most Product Managers receive equity that vests over time, often with a 1-year cliff followed by monthly graded vesting. Leave before your cliff? You walk away with nothing. Leave after it but before you're fully vested? You only keep what’s vested.
There are three common vesting types:
1️⃣ Cliff vesting: All-or-nothing until a fixed point (e.g., 12 months).
2️⃣ Graded vesting: Equity unlocks incrementally, often monthly or quarterly.
3️⃣ Performance-based vesting: Shares unlock only when goals are hit, not time-based.
If you leave your job, you typically have 90 days to exercise vested stock options or they expire. Unvested equity is forfeited unless your contract says otherwise. Some senior roles may include double-trigger acceleration in the event of an acquisition, but most don’t.
Mistakes like assuming everything is yours, forgetting expiration dates, or not tracking refresh grants can cost you thousands.
Know what’s vested, what’s at risk, and how your timeline aligns with your value.
Equity vesting is how your company grants you ownership over time, not all at once. Vesting is a schedule that dictates when your stock options actually become yours. No matter what type of equity you've been granted, none of it is truly yours until it vests.
For example, imagine you’ve been offered 10,000 RSUs as part of your total compensation package. You don’t get them all upfront. Instead, they vest gradually, maybe 25% after one year, then monthly over the next three. That means if you leave after 18 months, only a portion is yours. The rest disappears. That’s vesting: time-based or performance-based conditions that unlock your equity over time.
Vesting is about alignment. Companies want to reward long-term commitment and reduce the risk of employees walking away with large amounts of equity after a few months. It’s also a powerful retention tool, one that ensures you stay long enough to deliver real value.
Product Managers often sit at the center of high-impact work, leading teams through product launches, roadmap shifts, and long-term strategic bets. But that impact doesn’t always show up in your base salary. Vesting schedules determine when you actually get rewarded for that impact. And if you don't understand your vesting terms, you could be leaving equity on the table, or mistiming your exit and missing out on thousands (or more).
Not all vesting schedules are the same, and understanding which one applies to your equity grant is essential to knowing when your compensation becomes real. Most Product Managers encounter one of three core vesting types: cliff, graded, or performance-based. Each one works differently, and each has very different implications if you leave your role early.
Cliff vesting means nothing vests until you hit a specific milestone, usually a time-based threshold like 12 months. It’s all or nothing up until that point. For example, if your equity grant has a one-year cliff, you’ll receive 0% of your equity until your first work anniversary, at which point 25% may vest all at once.
Cliff vesting is common for new hires, especially at startups. It ensures early leavers don’t walk away with a chunk of ownership before delivering meaningful value.
Graded vesting allows your equity to vest in increments, this may be monthly, quarterly, or annually, after an initial cliff period. The most common schedule is 4 years with a 1-year cliff. After the first year (the cliff), 25% vests, and the remaining 75% vests in equal monthly chunks over the next 36 months.
This is the most common vesting structure in both startups and large tech companies, offering a balance of retention and fairness.
Instead of time, this type of vesting is tied to hitting specific business or personal milestones, like launching a new product, reaching a revenue target, or securing funding. You earn your equity only when that goal is met.
Performance-based vesting is often used for executives, founders, or senior hires who have direct influence over strategic outcomes.
Equity may feel like a guaranteed part of your compensation, but until it vests, it's conditional. Whether you're switching jobs, getting laid off, or facing an unexpected restructure, it's essential to understand what happens to your unvested equity when you walk out the door.
In most cases, if you leave the company before your equity has vested, you lose it. This includes resignations, layoffs, and terminations, unless your grant agreement states otherwise (which is rare). The logic is simple: the company was offering that equity in exchange for long-term contribution.
Even if you're let go through no fault of your own, unvested equity is almost always forfeited unless special terms were negotiated in your contract.
If you’ve been granted stock options (like NSOs or ISOs), there’s a critical post-departure window you need to know about. In most cases, you have 90 days to exercise your vested options after leaving the company.
Miss that window, and you lose the right to buy the shares, permanently. Some startups may offer extended windows, but this is the exception, not the rule.
Sometimes equity accelerates, meaning some or all of your unvested shares become vested, but only under very specific conditions.
This is called double-trigger acceleration and usually applies during acquisitions. The two “triggers” are:
When both happen, a portion of your unvested equity may vest early, but only if your contract includes this clause. It’s common for senior roles and worth asking about during negotiation.
Vesting may seem simple on paper, but it’s filled with traps that can quietly cost you tens of thousands of dollars, or more. Here are the most common mistakes Product Managers make with equity vesting, and how to avoid them.
Seeing a 100,000 share grant on paper can be exciting, but that number means little if only a fraction has vested. Many Product Managers assume the full grant is theirs from day one, only to realise too late that most of it is still unvested.
How to Avoid This Mistake: Always check how much is vested today, not just what’s promised over four years.
If you leave your company with vested stock options, the 90-day post-termination window applies to most grants. Miss that window, and your vested options expire permanently. This is one of the most costly and avoidable mistakes in startup compensation.
How to Avoid This Mistake: Mark the date. You don’t want to be stuck paying for something that just expired.
Many companies offer refresh grants each year or at key milestones. These can add up over time, but they come with their own vesting schedules. Product Managers often overlook these layers, failing to realise how much more equity is vesting behind the scenes.
How to Avoid This Mistake: Treat each new grant like a mini-offer: track its start date, schedule, and terms.
Equity isn’t just part of your compensation, it’s part of your long-term strategy. Understanding how vesting works gives Product Managers the tools to make smarter career decisions, negotiate better offers, and avoid painful mistakes that leave value on the table.
Whether you’re joining a startup with a 4-year vesting schedule or navigating layered refresh grants at a large tech company, here’s how to stay proactive:
1️⃣ Align product milestones with vesting milestones
If you’re about to ship a major feature or hit a high-visibility goal, consider how that aligns with your vesting timeline. Leaving just before a key unlock could mean walking away from both recognition and compensation.
2️⃣ Review vesting schedules before making a move
Before you accept a new role, or leave your current one, revisit your current vesting status. What’s vested? What’s at risk? What’s the timeline for your next tranche?
3️⃣ Ask about vesting during negotiations
Don’t just ask how many shares, ask how they vest. What’s the schedule? Is there a cliff? Is double-trigger acceleration included? The best time to clarify is before you sign.
4️⃣ Treat equity like a financial asset, not a bonus
Vested equity is part of your net worth. Track it, model it, and plan around it. If you’re unsure how your vesting fits into your broader financial picture, talk to a tax advisor or equity planner.
By understanding equity vesting and ownership timelines, you’re not just protecting your compensation, you’re setting yourself up for smarter, more strategic career growth.
👉 Ready to take it further?
Check out The 4 Types of Equity Product Managers Should Know to explore how NSOs, ISOs, RSUs, and ESPPs work, and how vesting ties into each.
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