ESOPs vested over 4 or 5 years?
Generally speaking, is ESOPs fully vested in 4 or 5 years? I am aware of 4 years vesting period which is common everywhere. However, the startup where I work decided to introduce ESOPs with a cliff period of 1 year (which is standard) and the remaining shares to be vested will be done in the remaining 48 months. That’s five years altogether. Also, there’s a clause that on termination of employment, the shares should be exercised without which they will be revoked. The CXOs say that it’s a standard YC template. Am I being lied to? Would it be right to say that this is not an employee friendly ESOPs?
4 years is common but 5 isn’t that rare.
But what’s predatory is that you have to exercise on termination. This is not common. This is unethical.
Kendall Dean
Stealth
a year ago
Thanks for confirming! The way the ESOP is designed is to retain the employees for longer period and not for immediate value creation for the company. That’s how I understand it.
Yes. Also, one thing to ask is whether the Esops are granted every month, quarterly, or yearly after the 1 year cliff.
Monthly is good.
Quarterly is ok.
Yearly is bad.
After 4 years is predatory.
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