What is the Vesting Period in ESOP?

Employee stock ownership plans (ESOPs), the term "vesting period" refers to the specific duration of time an employee must work at a company before they gain full ownership of the shares allocated to them. What is the vesting period in ESOP? It's essentially a timeline set by the employer that determines when the employee becomes entitled to the stock options or equity granted under the ESOP scheme. When companies offer ESOPs, they usually do not grant complete ownership of all the shares immediately. Instead, the shares "vest" over time. For example, a company might offer an ESOP with a 4-year vesting period and a 1-year cliff. This means the employee must complete at least one year of service before any shares vest (the cliff), and after that, the remaining shares are vested gradually—usually monthly or annually—over the remaining three years