Intro

A vesting schedule is a contract or agreement that defines when an employee can fully own the equity or benefits granted to them by the company. A vesting schedule is defined when making a grant or issuing shares.

Typically, vesting is the time a stakeholder must be employed by or otherwise connected to the company before the entitlement lapses and the grant can be exercised. The following characteristics define a time-based vesting plan: the vesting duration, or length of the allotment agreement; the interval of how frequently shares are issued; and a vesting 'cliff', a period that must pass before any grants are issued to the stakeholder.

Sometimes, vesting can be tied to performance conditions - this means vesting is dependent on meeting goals within a defined timeframe

How do I set up a vesting schedule?

Vesting schedule

You can set up a vesting schedule as a plan preset. This means that all grants issued from this plan will take the preset vesting schedule (unless you specify otherwise for a specific grant).

To set a plan preset vesting schedule for an existing plan, you can find the Plan in the Equity Plans > Pools & Plans page, click the three dots and 'Edit Initial Plan'.

If you first need to create a new plan, our guide here tells you how.

Which vesting types exist?

Ledgy offers four kinds of vesting:

Time-based (simple)
Time-based (custom)
Performance-based
Multi-trigger

Time-based (simple) vesting

With this type, the grants or shares vest evenly and linearly over the entire length. You can make the following settings for the time (simple) type:

Rounding:
- Down: Rounding down to the nearest whole option or share for any number less than 0.99. For example, 100.99 will be rounded down to 100.
- Up: Rounding up to the nearest whole option or share for any number more than or equal to 0.01. For example, 100.01 will be rounded up to 101.
- Nearest: Rounding up to the nearest whole option or share anything more than or equal to 0.5. For example, 100.5 will be rounded to 101, while 100.49 will be rounded to 100.
Vesting start date: This optional field allows you to define when the vesting begins, only if it is a different date from the grant date
Vesting on: You decide on which day the shares or grants should vest.
- Grant date: Vesting will take place on the same day of the month as the grant date. This is the default setting.
- Start date: Vesting will take place on the same day of the month as the start date.
- First day of the month: Vesting will occur on the month's first day.
- Last day of the month: Vesting will take place on the last day of the month.
Duration: Define the vesting runtime in months (for example 48)
Vest every: This is the interval in months that specifies in what increments the grant vests (for example 1 for monthly vesting or 3 for quarterly vesting)
Cliff: Define the minimum number of months a stakeholder must stay at the company before receiving the first batch of vested options.
- After the cliff has transpired, the % of the grant that would normally vest in this period will vest at once.
- For example, a 12 month cliff as part of a 48 month vesting schedule means that 25% of the grant will vest on the first anniversary of the vesting commencement date.

You can preview the vesting schedule of time-based vesting schedules once you have created the vesting schedule and specified the total size of the grant. Click 'Preview vesting chart' to do so.

An example of a linear, simple time-based vesting schedule, with a 48-month duration, 1-month interval and a 12-month cliff:

Time-based (custom) vesting

Custom time-based vesting schedules allow flexibility to create a non-linear time-based vesting schedule. You can determine what percentage or amount of the grant can vest over different periods.

Custom time-based vesting - Per cent

Modify how many per cent or amount of the grant or shares are vesting per self-defined period. You can make the following settings for the time (custom) type:

Rounding:
- Down: Rounding down to the nearest whole option or share for any number less than 0.99. For example, 100.99 will be rounded down to 100.
- Up: Rounding up to the nearest whole option or share for any number more than or equal to 0.01. For example, 100.01 will be rounded up to 101.
- Nearest: Rounding up to the closest whole option or share anything more than or equal to 0.5. For example, 100.5 will be rounded to 101, while 100.49 will be rounded to 100.
Vesting start date: This optional field allows you to define when the vesting begins.
Percentage: Determine what percentage of the grant amount will vest per period. The percentages of all periods must total 100%.
- You can think of this section as combining multiple simple time-based vesting schedules into one larger schedule
Duration: Define the vesting runtime in months.
Vest every: This is the interval in months that specifies in what increments the grant vests.
Add period: You can add additional vesting periods if the default 4 is not enough by clicking 'Add period'. Ledgy will show you how many total months your vesting duration adds up to, to help you sense check.
You can also remove vesting periods if the default 4 is too many, or you accidentally added too many vesting periods. Just click the Bin icon next to the period.

The vesting schedule below would result in a grant in which:

10% of the total grant vests in the first 12 months, vesting once a month
20% of the total grant vests in months 13-24 months, vesting once a month
30% of the total grant vests in months 25-36 months, vesting once a month
40% of the total grant vests in the final 12 months, vesting once a month

Custom time-based vesting - Amounts

If your vesting schedule for a grant specifies a specific amount of the grant that should vest on particular dates, you can also choose this route.

You must enter the vesting date and the exact amount of the grant that vests on the date, with the total number of vested grants adding up the grant size.

Performance-based vesting

With this type, the grants or shares vest when the stakeholder completes your defined milestones. Please read this dedicated article about performance-based vesting conditions.

Multi-trigger vesting

With this type, you can combine time-based vesting (simple or custom) with performance-based vesting conditions.

Under the Vesting section of the transaction form, pick Time schedule + triggers.

It will open the following section that has ~3 parts:

Time-based trigger (can choose between Simple and Custom)
Additional vesting triggers (all of them must be centralised vesting performance conditions)
General Setting + Accelerate

Notes on multi-trigger vesting!

How does Ledgy calculate vesting within multi-trigger vesting?

For a grant to vest, all its triggers must be achieved. This means:

If the time-based trigger is a simple vesting of 48 months (vesting every 6 months with a 6-month cliff), then with “normal” vesting, this meant that after two years, half of the grant was vested.
- Now, if any of the two additional triggers 10M ARR and Liquidity are not achieved after two years, the vested amount is 0.
- For the vested amount to be indeed half of the grant, we need both 10M ARR and Liquidity to be at least 50% achieved (50% represents half the grant)

After four years
- If either 10M ARR or Liquidity is not achieved yet, the grant vested will be 0 (still)
- If they both are achieved, but one of them is only achieved at 80%, grant vested will be 80% of the grant
- If one is achieved 80% and the other is achieved 50%, grant vested will be ⚠️ 40% of the grant (see 80% * 50% = 40%)

However, the employee dashboard will show the time-based vesting schedule, and estimate the current value of the employee's grant based on the time-based vesting component, with the disclaimer that nothing is vested until all trigger conditions have been met.

How is multi-trigger vesting reflected in the employee dashboard?

The following examples are for a stakehlder's grant that has 1 simple time trigger and 3 additional triggers, Liquidity (achieved ✅), Series B (achieved ✅) and 10M ARR (in progress 🔄).

Your Equity:

Vesting breakdown: chart update on little hovering tooltip

The chart shows the amount that would be vested if there were no additional triggers. To know how much was vested for real (i.e. can be settled/exercised), check the number next to Total (it is 0 in our example) or go to the Holdings page, which is the employee dashboard’s true single source of truth.

Vesting breakdown: If you click the i-icon at the bottom of your vesting chart, you’ll see more insights

How can I pause the vesting?

You can pause the vesting, if you want to know more on how to pause a vesting schedule, please read this article.

How can I add FTE adjustments (vesting slowdown periods)?

You can adjust the rate at which a grant vests if an employee changes their working hours.

For example, if an employee goes from 100% FTE to 75% FTE, you can add the start date at which this FTE change began (in the example below, the employee changed to 75% FTE on 1st January 2025).

You can then add the date at which their FTE changes again (in the example below, the employee returned to 100% FTE on 1st June 2025).

The total duration of the employee's vesting schedule will be extended by the number of months it would take to vest what didn't vest in the FTE-adjusted period(s) if it vested at a 100% FTE rate.