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What is Time-based vesting?

Time-based vesting is the most common vesting form, next to performance-based vesting. The schedule covers that the allocation of the shares an employee/founder is about to receive is dependent on time worked in the company.

In the picture below you can see one of the forms of time-based vesting, called linear vesting. Here the allocation of shares is equally divided per each year, as opposed to back-loaded vesting, where the allocation is not linear.

Example of time-based vesting

An industry standard is to offer employees a linear 4-year time-based vesting where every year they receive an equal portion of 25% of their stock options. The vesting period usually starts with a 1-year cliff.


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