Vesting Schedule Value Calculator
Equity compensation often follows a 4-year vesting schedule with a 1-year cliff: 25% of your grant vests after 12 months, then the remaining 75% vests ratably each quarter (or month) over the following 36 months. This calculator shows the number of shares vesting at each milestone and their projected value based on a stock price you provide. RSU values are calculated as shares vested times the assumed stock price. Option values use the spread over your strike price.
Vesting schedule formula
Cliff vest (Year 1): Shares = Total * 25%
Quarterly vest (Years 2-4): Shares = Total * 75% / 12 quarters (6.25% each quarter)
RSU Value = Shares Vesting * Stock Price
Option Value = Shares Vesting * max(Stock Price - Strike Price, 0)
The 4-year / 1-year cliff schedule is the most common in the technology industry. After the cliff, shares typically vest quarterly or monthly until the full grant has vested.
Key vesting concepts
- The cliff protects the company: if you leave in the first year, you receive no equity.
- After the cliff, vesting is typically monthly or quarterly until the 4-year mark.
- At each vesting date, RSU value = shares vested x market price; option value = shares x (market price - strike).
- Tax withholding is usually automatic for RSUs: your employer sells shares to cover the tax, then delivers the rest.
- Some companies offer accelerated vesting provisions upon acquisition or other triggering events.
Vesting schedules: frequently asked questions
What is a vesting schedule?
A vesting schedule is the timeline over which you earn the right to keep equity compensation (stock options or RSUs). You must remain employed to receive shares that have not yet vested. The most common schedule is 4-year vesting with a 1-year cliff.
What is a cliff in a vesting schedule?
A cliff is the minimum employment period before any equity vests. With a 1-year cliff on a 4-year schedule, you receive 25% of your grant after 12 months and then earn the remainder monthly or quarterly over the next 3 years. If you leave before the cliff, you receive nothing.
What is the difference between RSUs and stock options?
RSUs (Restricted Stock Units) are company shares granted to you outright upon vesting. Their value is the stock price at vesting times the number of shares. Stock options give you the right to buy shares at a fixed price; their value is the difference between the current price and the strike price.
How is the value of RSUs taxed?
RSUs are taxed as ordinary income at the time they vest. The taxable amount is the fair market value of the shares on the vesting date multiplied by the number of shares vested. Your employer typically withholds shares to cover the tax liability.
Should I sell RSUs immediately when they vest?
Many financial advisors suggest selling RSUs promptly after vesting to avoid concentration risk: your employment income and your investment portfolio both depend on the same company. Whether to hold for potential appreciation depends on your financial situation and risk tolerance.
Official sources
- IRS Publication 525: Taxable and Nontaxable Income (Restricted Property).
- SEC: Employee Stock Options.
Reviewed by the CalculatorHub team, edited by James Graham, 14 June 2026. See our methodology.