Stock option issuances to employees will typically stipulate a cliff and a vesting term in either months or years, both of which terms we'll look at now. A four year vesting term and a one year cliff is typical for the tech industry. A one year cliff implies that no shares are vested to an employee until after their first 12 months are completed. It is intended to act like a probation period for new employees, and in the event that they leave the startup prior to their first anniversary, it protects the company from handing out options to non-employees.

After the one year cliff, the vesting period begins and employee stock options typically vest monthly or in a four year term at a rate of 1 / 48th per month. As a result, if an employee receives a 10,000 share grant with a four year vesting term and a one year cliff, the employee would begin to take ownership of their options after 12 months and during a four year term at 2,500 shares per year, the 10,000 divided by 4, or 208 shares per month, 10,000 divided by 48.