Compensation guide · Reviewed 28 August 2026

A stock grant isn't yours until it vests.

Being granted shares and owning them are two different moments in time. Here is how a cliff and a vesting period turn a grant into actual ownership, and why the vesting date matters more than the number on your offer letter.

Grant date, cliff and vesting period: three different milestones

A stock grant or RSU award starts with a grant date — the day a company promises you a number of shares. But a promise isn't ownership: most grants include a cliff, an initial period (commonly one year) during which zero shares vest, regardless of how much time has passed. If your employment ends before the cliff date, the entire grant is typically forfeited, which is why the cliff functions as an early retention incentive rather than a simple delay.

Once the cliff passes, the remaining shares usually vest gradually — often in equal amounts spread evenly across the rest of the vesting period, though monthly or quarterly vesting after the cliff is also common. This means the true value you can count on at any point in time is only the vested portion; unvested shares remain a projection tied to continued employment, not a guaranteed asset.

Why unvested shares should be valued differently from vested ones

Vested shares are yours regardless of what happens next — you can typically hold or sell them freely (subject to any company trading policies), and their value doesn't depend on staying employed. Unvested shares are fundamentally different: their eventual value depends on both the future share price and your continued employment through each vesting date. Treating unvested shares as equivalent to cash or vested stock in a net-worth calculation overstates your actual current financial position.

This distinction matters most when weighing a job change. Leaving before a vesting date forfeits the unvested portion of a grant, so comparing a new offer against your current compensation should account for what unvested equity you'd be walking away from, not just your current salary.

Reading a vesting calculator's output correctly

A vesting calculator applies the cliff and straight-line assumptions to your specific grant size, share price and time elapsed, producing an estimated vested value and a separate unvested value. Because it assumes even, straight-line vesting after a single cliff, always cross-check the output against your actual grant agreement if your plan uses a different schedule — for example, some plans vest a larger chunk immediately at the cliff, or use quarterly rather than continuous vesting.

Estimate your vested share value ↗ See how it fits your net worth ↗

Frequently asked questions

What does it mean for stock to 'vest'?

Vesting is the process by which you earn full ownership of granted shares over time, usually contingent on continued employment. Until shares vest, you don't actually own them — they can typically be forfeited if you leave the company beforehand.

What is a cliff in a vesting schedule?

A cliff is an initial waiting period — commonly one year — during which no shares vest at all, even though time is passing toward the total vesting period. If you leave before the cliff date, you typically forfeit the entire grant. After the cliff, shares usually vest gradually.

What's the difference between a stock grant/RSU and stock options?

A restricted stock unit (RSU) or stock grant gives you actual shares once vested, worth their full market value. A stock option instead gives you the right to buy shares at a fixed strike price, so its value depends on the stock price rising above that strike — the two have very different risk and value profiles.

Do I owe tax when shares vest, or only when I sell them?

In many jurisdictions, the value of shares at vesting is treated as ordinary income and taxed then, separate from any later capital gain or loss when you eventually sell. Tax treatment varies significantly by country and plan type, so this is worth confirming with a tax professional for your specific situation.

Does a vesting schedule always use even, straight-line vesting after the cliff?

No. Straight-line vesting after a single cliff is common, but some grants vest a larger portion immediately at the cliff, use quarterly rather than continuous vesting, or apply entirely different schedules. Always check your specific grant agreement rather than assuming a standard structure.

Source note: This guide models a common cliff-plus-straight-line vesting structure. All calculations happen in your browser — nothing you enter is sent to a server or stored. This is educational information, not tax or legal advice — confirm the exact terms of your grant with your employer or a qualified professional.