This is why I'm skeptical of cliffs: it creates incentive for the employees to quit the day after vesting, and for the employer to fire them the day before.
Most likely in that scenario they got a better offer and probably did a good job. Arguably the cliff worked in keeping them around just a little longer.
I can't imagine many scenarios where the company firing at 364 days purely to avoid the vesting makes sense. Why hang on to someone so long if they're not adding value?
Suppose an employee is dissatisfied. In the presence of a cliff in the near future he may be hesitant to stir the pot and instead decide to wait for it before bringing this up. Meanwhile not being heard he will accumulate resentment.
On the other hand, suppose an employer is dissatisfied with an employee. With a looming cliff the employer may decide not to risk it a fire the employee beforehand. Absent the time pressure of a cliff they may be able to take time and talk through the problems.
None of that would be a problem if performance discussions were happening throughout the entire year. But the cliff serves to hide the problems until they explode the day before or the day after the vesting day.
Agree on that. Likely a signal of bigger systematic problems too.
That said, firing them on day 364 is a shitty thing to do.
In most cases if you're hiring where options are seen as necessary to get that talent - seems like it's going to be an odd (but not impossible) case where you're happy to walk that talent out the door too.