Generally, privately held, VC-backed UK companies prefer options to vest over a period of time to provide a long-term incentive to their employees. The “market standard” for privately held, VC-backed companies in the UK is for options to vest over a total four-year period with vesting occurring in equal monthly tranches following an initial one-year “cliff”: this means 25% of the option vests at the end of year 1, with equal monthly tranches vesting thereafter up to the end of year 4. However, companies vary in their approaches.
It is much less common to link vesting for general employees to performance conditions (e.g. the company achieving specified milestones), although there may be certain circumstances where this is considered appropriate for specific individuals (typically senior hires with direct responsibility for the given objective).
Learn More: UK Founder Series: Incentivise Your Team