What is it:
Graded vesting is a structure in which an award vests in stages across the schedule rather than all at once. The increments can be uniform, vesting in equal amounts each period, or non-uniform, vesting in unequal amounts (either front-loaded or back-loaded).
Why does it matter:
Knowing whether your own schedule is uniform or non-uniform changes how you calculate what's vested at any point in time. While many companies use a uniform schedule for graded vesting, a growing number of companies are adopting non-uniform schedules. The difference (regardless of whether it is front-loaded or back-loaded) has a significant impact on how much equity is unvested, which impacts your departure calculation.
What do people most often get wrong:
People often assume "graded" and "ratable" describe two different things, or that a graded schedule always vests in equal amounts. In practice, the two terms are commonly used interchangeably, and the increments themselves can be equal or unequal. The plan document, not the label, is what actually tells you the shape of the schedule.