go over the cliff

English translation: fail to earn any stock options by not reaching the "cliff" (cut-off date)

GLOSSARY ENTRY (DERIVED FROM QUESTION BELOW)
English term or phrase: go over the cliff
English translation:fail to earn any stock options by not reaching the "cliff" (cut-off date)

12:26 Jun 19, 2014
    The asker opted for community grading. The question was closed on 2014-06-22 12:54:11 based on peer agreement (or, if there were too few peer comments, asker preference.)


English to English translations [PRO]
Finance (general)
English term or phrase: go over the cliff
That means you earn the right to 1/48th of the shares you were originally granted per month over four years (48 months), but you don’t get anything if you leave prior to your one-year anniversary (and go over the cliff)
Iberi (X)
fail to earn any stock options by not reaching the "cliff" (cut-off date)
Explanation:
In this context, "go over the cliff" does not have its common meaning of going too far, taking a drastic step (though that could be a secondary meaning that it is playing with). "Cliff" is a technical term here, referring to an aspect of what is called vesting.

There are different kinds of vesting, but this refers to vesting stock options in employees: that is, employers giving employees the right to buy stock and thereby make a profit, as a form of remuneration:
http://en.wikipedia.org/wiki/Employee_stock_option

What happens with these schemes is that employees are given a certain amount of stock option periodically, say every month or every quarter. But with cliff vesting, which is common, there is a cliff, which means that for a certain period, commonly a year, after the employee joins the company, no options are vested, and then at the end of the year a whole lot is vested at once. After that, the normal periodic vesting (monthly, quarterly, or whatever) continues.

It's called a cliff because if you look at this on a graph, after the cliff it's a simple step by step rise, but before the cliff the graph says horizontal, at zero, for the first year (nothing being vested) and then suddenly goes up vertically, rather like a cliff.

So "go over the cliff", referring to what happens when you leave the company (or are dismissed) before the cliff date, is a kind of joke: by failing to reach the cliff date, it is as if you had fallen down to the ground; having had a prospect of options, you suddenly have none.

It really means "miss the cliff".

"In cases of partial vesting, a "vesting schedule" is a table or chart showing the portion of a right that is vested over time; typically the schedule provides for equal portions to vest on periodic vesting dates, usually once per day, month, quarter, or year, in stair-step fashion over the course of the vesting period. Often there is a cliff by which the first few steps in the graph are missing, so that there is no vesting at all for a period (usually six or twelve months in the case of employee equity), after which there is a cliff date upon which a large amount of vesting occurs all at once."
http://en.wikipedia.org/wiki/Vesting#Vesting_arrangements_an...

"One of the most exciting aspects of joining a startup is getting stock options. It gives you ownership in the company and aligns incentives between management and employees. However, one part of the standard options package causes a lot of debate amongst employees and management. It’s the Cliff.
A typical options vesting package spans four years with a one year cliff. A one year cliff means that you will not get any shares vested until the first anniversary of your start date. At the one year anniversary, you will have 25% of your shares vested. After that, vesting occurs monthly. So, if I’m a startup engineer granted 4,800 shares in my options package, at the one year mark, I get 1,200 shares vested (if I quit or am fired before that date, I get zero). After the one year mark, each month I stay with the company, I get another 100 shares vested (1/48th of the options package).
Many startup employees hate the one year cliff. Managers and VCs like it since they think employees will work really hard to make sure that they reach the cliff date. Employees, on the other hand worry that management will let them go just before they reach the cliff. The sad thing is that I have seen this occur at startups. You have an employee who is decent, but not great. Management keeps him or her for nearly a year, but then let’s them go a month before the cliff."
http://www.businessinsider.com/everything-you-need-to-know-a...

This passage shows that it's not necessarily a matter of the employee choosing to leave; sometimes they are fired just before the cliff date and lose their options. To use the same metaphor, they don't jump over the cliff, they are pushed.

"Vesting refers to the process by which an employee earns her shares over time. The most common form of vesting in Silicon Valley is monthly over four years with a one-year cliff. That means you earn the right to 1/48th of the shares you were originally granted per month over four years (48 months), but you don’t get anything if you leave prior to your one-year anniversary (and go over the cliff)."
https://blog.wealthfront.com/vesting-stock-options/
Selected response from:

Charles Davis
Spain
Local time: 21:25
Grading comment
Selected automatically based on peer agreement.
4 KudoZ points were awarded for this answer



Summary of answers provided
4 +3fail to earn any stock options by not reaching the "cliff" (cut-off date)
Charles Davis
4 +1to go too far -- to your own detriment
acetran
4pass on (die)
Phoenix III


  

Answers


6 mins   confidence: Answerer confidence 4/5Answerer confidence 4/5 peer agreement (net): +1
to go too far -- to your own detriment


Explanation:
http://forum.wordreference.com/showthread.php?t=1732307



--------------------------------------------------
Note added at 8 mins (2014-06-19 12:34:44 GMT)
--------------------------------------------------

It is like taking the extreme step (here, leaving prior to completion of one year).

acetran
Specializes in field
Native speaker of: Native in HindiHindi, Native in EnglishEnglish
PRO pts in category: 12

Peer comments on this answer (and responses from the answerer)
agree  Jean-Claude Gouin
3 mins
  -> Thanks!

agree  Jack Doughty
35 mins
  -> Thanks!

neutral  Charles Davis: No, it doesn't mean that here. The "cliff" is the date for the first year of stock options to become effective. "Falling off the cliff" here means missing your options, falling to zero, by leaving or being fired (not necessarily your choice).
1 hr
  -> Thanks for the explanation as usual. So sweet of you to not disagree but make it neutral. Compassionate :)

disagree  BrigitteHilgner: Given the context, the answer is inadequate.
1 hr
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9 mins   confidence: Answerer confidence 4/5Answerer confidence 4/5
pass on (die)


Explanation:
...

Phoenix III
United States
Local time: 15:25
Native speaker of: Native in EnglishEnglish, Native in SpanishSpanish
Notes to answerer
Asker: Thanks

Login to enter a peer comment (or grade)

1 hr   confidence: Answerer confidence 4/5Answerer confidence 4/5 peer agreement (net): +3
fail to earn any stock options by not reaching the "cliff" (cut-off date)


Explanation:
In this context, "go over the cliff" does not have its common meaning of going too far, taking a drastic step (though that could be a secondary meaning that it is playing with). "Cliff" is a technical term here, referring to an aspect of what is called vesting.

There are different kinds of vesting, but this refers to vesting stock options in employees: that is, employers giving employees the right to buy stock and thereby make a profit, as a form of remuneration:
http://en.wikipedia.org/wiki/Employee_stock_option

What happens with these schemes is that employees are given a certain amount of stock option periodically, say every month or every quarter. But with cliff vesting, which is common, there is a cliff, which means that for a certain period, commonly a year, after the employee joins the company, no options are vested, and then at the end of the year a whole lot is vested at once. After that, the normal periodic vesting (monthly, quarterly, or whatever) continues.

It's called a cliff because if you look at this on a graph, after the cliff it's a simple step by step rise, but before the cliff the graph says horizontal, at zero, for the first year (nothing being vested) and then suddenly goes up vertically, rather like a cliff.

So "go over the cliff", referring to what happens when you leave the company (or are dismissed) before the cliff date, is a kind of joke: by failing to reach the cliff date, it is as if you had fallen down to the ground; having had a prospect of options, you suddenly have none.

It really means "miss the cliff".

"In cases of partial vesting, a "vesting schedule" is a table or chart showing the portion of a right that is vested over time; typically the schedule provides for equal portions to vest on periodic vesting dates, usually once per day, month, quarter, or year, in stair-step fashion over the course of the vesting period. Often there is a cliff by which the first few steps in the graph are missing, so that there is no vesting at all for a period (usually six or twelve months in the case of employee equity), after which there is a cliff date upon which a large amount of vesting occurs all at once."
http://en.wikipedia.org/wiki/Vesting#Vesting_arrangements_an...

"One of the most exciting aspects of joining a startup is getting stock options. It gives you ownership in the company and aligns incentives between management and employees. However, one part of the standard options package causes a lot of debate amongst employees and management. It’s the Cliff.
A typical options vesting package spans four years with a one year cliff. A one year cliff means that you will not get any shares vested until the first anniversary of your start date. At the one year anniversary, you will have 25% of your shares vested. After that, vesting occurs monthly. So, if I’m a startup engineer granted 4,800 shares in my options package, at the one year mark, I get 1,200 shares vested (if I quit or am fired before that date, I get zero). After the one year mark, each month I stay with the company, I get another 100 shares vested (1/48th of the options package).
Many startup employees hate the one year cliff. Managers and VCs like it since they think employees will work really hard to make sure that they reach the cliff date. Employees, on the other hand worry that management will let them go just before they reach the cliff. The sad thing is that I have seen this occur at startups. You have an employee who is decent, but not great. Management keeps him or her for nearly a year, but then let’s them go a month before the cliff."
http://www.businessinsider.com/everything-you-need-to-know-a...

This passage shows that it's not necessarily a matter of the employee choosing to leave; sometimes they are fired just before the cliff date and lose their options. To use the same metaphor, they don't jump over the cliff, they are pushed.

"Vesting refers to the process by which an employee earns her shares over time. The most common form of vesting in Silicon Valley is monthly over four years with a one-year cliff. That means you earn the right to 1/48th of the shares you were originally granted per month over four years (48 months), but you don’t get anything if you leave prior to your one-year anniversary (and go over the cliff)."
https://blog.wealthfront.com/vesting-stock-options/

Charles Davis
Spain
Local time: 21:25
Native speaker of: Native in EnglishEnglish
PRO pts in category: 82
Grading comment
Selected automatically based on peer agreement.

Peer comments on this answer (and responses from the answerer)
agree  BrigitteHilgner: Yes, the only answer which makes sense in this context.
52 mins
  -> Thank you, Brigitte!

agree  Thayenga: Great explanation, Charles. As always. :) //// Hmmm sure doesn't come across like that. ;)
3 hrs
  -> Thanks very much, Thayenga :) (I find finance very confusing: I have to concentrate hard!)

agree  B D Finch: Brilliantly clear explanation that confirms me in my belief that I shouldn't dare do any financial translation because of all the jargon I would mistake for normal language!.
6 hrs
  -> Thank you very much, Barbara! I do some now and then (as long as it's fairly simple), but don't really feel comfortable with it.
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