vestingI have a contract in front of me saying:
All shares shall vest on a pro rata basis monthly over a 2year period with a 3-month cliff period. 100 % of unvested shares shall vest on closing of sale of the Company.
I understand the 2nd part - all shares are automatically fully vested in case company is sold.
I don’t understand the first part, what does “pro rata basis” mean, and what does “cliff” mean?
In short:
pro rata = proportionated to the period. Ie.: after the first year you have 50% vested, at the end of the second year you have 100%. How much after 6 months? 25%. 3 months? 12.5, and so forth.
3-month cliff period, means that during the first 3 months there is no vesting. And at the beginning of your 4th month you’ll have 12.5% vested all in one go.
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