Unique New Vesting Schedules

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Equity grants are a common part of most compensation packages, especially within the tech industry, and companies have typically utilized them to align employee interests with the long term success of the business and also reduce turnover by getting employees to stay with the company for longer.

Traditionally, companies will use a 4-year vesting schedule, where employees will get 25% of their total equity grant every year for 4 years as long as they’re with the company. With rapidly changing economic and job markets though, more companies have started experimenting with unique vesting schedules as a way to attract more talent while also saving money. We wanted to highlight a few of those companies in this post.

Amazon’s vesting schedule is probably most notorious in tech for being unique, where employees only get 5% of their equity grant after year 1, 15% after year 2, and 40% after years 3 and 4 (notated as 5/15/40/40). In order to compete with other companies in the short term, they also offer sign-on bonuses which get paid through the first 2 years as a way to make up for the limited equity vesting during that time.

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