Stock as part of your salary sounds amazing. And honestly, it can be. But there’s a catch baked into almost every offer, and a lot of people don’t find out about it until it’s too late.
It’s called a vesting schedule.
When a company grants you stock, you don’t actually own it yet. You have to earn it over time by staying at the company. According to Investopedia, stock compensation typically comes with a three to four year vesting schedule — meaning you have to stick around that long before the stock is truly yours.
Now here’s where it gets painful.
Many companies use what’s called a cliff. A one-year cliff is super common, and it means you earn zero stock until you’ve hit that first anniversary. If you leave on day 364, you get nothing. Not a partial amount. Nothing.
The most typical setup is a one-year cliff combined with a four-year vesting period. That means you get your first chunk of stock after year one, then the rest gradually over the following three years. SHRM notes that a four-year vesting period is the standard most companies model their stock grants on — for both employees and contractors. So if you’re three years in and thinking about leaving, you might be walking away from a significant chunk of stock you thought was yours but technically isn’t yet.
That’s not a technicality. That’s real money left on the table.
So before you sign any offer that includes stock, ask these questions straight up: What’s the vesting schedule? Is there a cliff? How long until I’m fully vested? What happens to my stock if the company is acquired, or if I get laid off? Get the answers in writing, not just from a recruiter chatting you up over Zoom.
If you’re comparing two job offers and one pays more in base salary while another loads you up with stock, run the numbers carefully. The stock isn’t guaranteed income — it’s conditional on you staying, the company succeeding, and the vesting timeline actually completing. Base salary hits your account on Friday. Stock might hit your account in four years, if everything goes right.
None of this means you should turn down stock-based compensation. It’s genuinely been life-changing for a lot of people. Just don’t let the shiny number on the offer letter make you forget to read what’s underneath it.