ESOPs vested over 4 or 5 years?
Generally speaking, is ESOPs fully vested in 4 or 5 years? I am aware of 4 years vesting period which is common everywhere. However, the startup where I work decided to introduce ESOPs with a cliff period of 1 year (which is standard) and the remaining shares to be vested will be done in the remaining 48 months. That’s five years altogether. Also, there’s a clause that on termination of employment, the shares should be exercised without which they will be revoked. The CXOs say that it’s a standard YC template. Am I being lied to? Would it be right to say that this is not an employee friendly ESOPs?
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4 years is common but 5 isn’t that rare.
But what’s predatory is that you have to exercise on termination. This is not common. This is unethical.
Thanks for confirming! The way the ESOP is designed is to retain the employees for longer period and not for immediate value creation for the company. That’s how I understand it.
Yes. Also, one thing to ask is whether the Esops are granted every month, quarterly, or yearly after the 1 year cliff.
Monthly is good.
Quarterly is ok.
Yearly is bad.
After 4 years is predatory.