How do you negotiate a better equity grant vesting schedule?

1 What is a vesting schedule?

A vesting schedule is a set of rules that defines when and how you can exercise your equity grant, meaning convert it into actual shares that you own. Typically, vesting schedules have two components: a cliff and a period. A cliff is the minimum amount of time you have to work for the company before any of your equity grant vests. A period is the total duration of the vesting schedule, usually divided into monthly or quarterly increments. For example, a common vesting schedule is four years with a one-year cliff. This means that you have to work for the company for at least one year before you can exercise 25% of your equity grant, and then the remaining 75% vests gradually over the next three years.

3 How to research your market value?

Before you start negotiating your vesting schedule, you need to know your market value and what kind of equity grants are standard in your industry and role. You can use online tools, such as AngelList, Glassdoor, or EquityZen, to get an estimate of the average salary and equity range for similar positions at comparable companies. You can also network with peers, mentors, or recruiters who have experience or insights into the equity compensation practices of your target company or sector. Additionally, you can consult with a financial or legal advisor who can help you understand the implications and trade-offs of different vesting schedules and equity types.

4 How to prepare your negotiation strategy?

Once you have a clear idea of your market value and expectations, you can prepare your negotiation strategy. You should start by identifying your priorities and preferences, such as how much equity you want, how soon you want it to vest, and what kind of exit scenarios you anticipate. You should also consider your alternatives and walk-away points, such as what other offers you have or can get, and what is the minimum vesting schedule you are willing to accept. Furthermore, you should anticipate the possible objections and counteroffers from the employer, such as why they have a certain vesting schedule policy, how they value your contribution, and what other benefits they can offer.

5 How to communicate your proposal?

When you are ready to communicate your proposal, you should do so in a respectful and confident manner. You should emphasize your interest and enthusiasm for the company and the role, and highlight your skills and achievements that make you a valuable asset. You should also explain your rationale and reasoning behind your vesting schedule request, and how it aligns with the company's vision and goals. You should avoid making ultimatums or demands, and instead use open-ended questions and suggestions to invite dialogue and feedback. You should also be prepared to listen and understand the employer's perspective and concerns, and to negotiate and compromise if necessary.

6 How to finalize your agreement?

After you have reached a mutual agreement on your vesting schedule, you should confirm it in writing and review it carefully before signing. You should make sure that the agreement reflects the terms and conditions that you discussed and agreed upon, and that there are no hidden clauses or loopholes that could affect your rights or obligations. You should also ask for a copy of the equity grant agreement and the company's stock plan, which contain more details and rules about your equity grant and how it works. Finally, you should keep track of your vesting schedule and exercise dates, and consult with a tax or financial professional before making any decisions regarding your equity grant.

7 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?