Definition
Cliff vesting is a retirement or stock option plan condition where employees must work for a set period before becoming fully vested in benefits or equity compensation.
Related Services
HR consulting, stock option planning, and retirement plan advisory services help businesses design competitive vesting schedules that attract and retain employees.
Problem and Application
Without clear vesting structures, companies risk high employee turnover or legal issues. Employers use cliff vesting to incentivize employee retention while employees must consider the impact on their compensation.
Conclusion
Cliff vesting benefits both employers and employees when structured effectively. It encourages long-term commitment while ensuring fair compensation practices.
