You just got an offer from another company. Better role, better comp, better growth opportunity. You're excited. Then you check your equity grant details and see it: $240,000 in unvested RSUs that you'll forfeit if you leave. And 15,000 vested stock options that you have 90 days to exercise, or they expire forever.
Suddenly, this career move just got a lot more complicated.
Job changes are the highest-stakes moments for equity decisions. The choices you make in your last 60 days at your current company and first 90 days after leaving can mean the difference between capturing hundreds of thousands in value or walking away from it.
Let's break down exactly what happens to your equity when you leave and how to make smart decisions under pressure.
What Happens to Different Equity Types When You Leave
Not all equity is treated the same when you resign or get laid off. Here's the breakdown:
Unvested RSUs: You Lose Them
Restricted Stock Units that haven't vested yet are forfeited when you leave. There are rare exceptions (acquisition acceleration clauses, special severance packages for layoffs), but the default rule is simple: Unvested RSUs are gone.
What this means: If you have $200,000 in RSUs vesting over the next two years and you leave today, you forfeit that $200,000. It doesn't matter if you've been at the company for five years or if vesting is "just one more month away." Unvested means forfeited.
Vested RSUs: You Keep Them
RSUs that have already vested are yours. They're in your brokerage account as actual shares. Leaving your job doesn't change that you own the shares.
What to decide: Should you hold them or sell them? This isn't an equity decision; it's a portfolio concentration decision. Are you comfortable with 30-40% of your net worth in one stock? If not, sell and diversify.
Stock Options (ISOs and NSOs): The 90-Day Window
This is where things get complex and expensive. When you leave your company (voluntarily or involuntarily), you typically have 90 days to exercise any vested stock options. If you don't exercise within that window, they expire, worthless.
The catch: Exercising costs money. If you have 20,000 options with a $10 strike price, exercising costs $200,000 plus taxes (if NSOs). Can you afford that? Is it worth it?
ESPP Shares: Usually Yours, But Check the Details
Employee Stock Purchase Plan shares you've already purchased are typically yours to keep. However, some ESPPs have restrictions check your plan documents.
If you have an open ESPP purchase period when you leave, that period usually terminates, and your contributions may be refunded or used to purchase shares pro-rata. Read your plan details carefully.
The 90-Day Post-Termination Exercise Window: Your Biggest Decision
Ninety days sounds like plenty of time. It's not. Here's why this window creates so much stress:
- You need cash immediately. Exercising options requires paying the strike price × number of shares. That's often $100,000-$500,000.
- Taxes hit immediately (for NSOs). If you exercise NSOs, you owe ordinary income tax on the spread between strike price and current fair market value even if you can't sell shares yet.
- AMT might hit (for ISOs). Exercising ISOs can trigger Alternative Minimum Tax, adding tens of thousands to your tax bill even though you haven't sold shares.
- You're unemployed or starting a new job. You're dealing with job transitions, relocation, or ramping up at a new company. The last thing you want is a six-figure financial decision with a ticking clock.
- Liquidity is uncertain. If your company is private, you might exercise options but have no way to sell shares for years. You're locking up cash with no exit timeline.
How to Decide: Exercise or Walk Away?
This isn't a simple yes/no. Here's the framework:
Step 1: Calculate the All-In Cost
- Exercise cost: Strike price × number of options
- Tax cost (NSOs): (FMV – strike price) × marginal tax rate
- Tax cost (ISOs): Potentially AMT if spread is large
- Opportunity cost: Could this cash be better used elsewhere?
Example:
You have 20,000 NSOs, strike price $8, current FMV $20. Your marginal tax rate is 40% (federal + state).
- Exercise cost: 20,000 × $8 = $160,000
- Spread: 20,000 × ($20 – $8) = $240,000
- Tax owed: $240,000 × 40% = $96,000
- Total cash needed: $256,000
Can you afford $256,000? Do you have it liquid? Would spending it create financial stress?
Step 2: Assess Company Viability and Liquidity
- Is your company likely to succeed? Exercising options in a company that fails means you've spent six figures on worthless shares.
- When can you sell? If the company is private with no clear IPO timeline or secondary market, you might hold illiquid shares for 5-10 years. Can you afford to lock up that much cash?
- Is there a secondary market? Some late-stage startups have secondary markets where you can sell shares. If liquidity exists, exercising makes more sense.
Step 3: Compare to Your New Compensation
- How much equity are you getting at the new company? If your new role includes $300,000 in RSUs, walking away from $200,000 in unvested RSUs at your old company might be rational you're replacing it.
- What's the risk profile? Swapping late-stage startup equity for early-stage startup equity changes your risk. Don't assume all equity is equivalent.
Step 4: Run the Upside Scenarios
- Best case: Your company goes public or gets acquired. Shares are worth 5x-10x current value. What's the dollar value if that happens?
- Realistic case: Company succeeds modestly. Shares are worth 2x current value.
- Downside case: Company struggles or fails. Shares are worth zero.
Assign rough probabilities. If realistic/downside cases dominate, walking away might be smart.
The Emotional Traps That Lead to Bad Decisions
Trap 1: Sunk Cost Fallacy
"I've been here five years I can't walk away from my equity."
Yes, you can. The time you've spent is gone whether you exercise or not. The only question is: Is exercising a good decision today with the information you have now?
Trap 2: FOMO (Fear of Missing Out)
"What if the stock 10x and I missed it?"
Yes, that's possible. It's also possible the stock goes to zero. You can't make decisions based on best-case scenarios you need realistic probabilities.
Trap 3: Loyalty Guilt
"If I don't exercise, it feels like I don't believe in the company."
You're making a financial decision, not a loyalty pledge. The company will be fine regardless of your choice. Protect your finances first.
Trap 4: Paralysis
"This is too complicated. I'll think about it later."
You have 90 days. If you wait until day 85, you're making decisions in panic mode. Start immediately.
Special Situations and Exceptions
Extended Exercise Windows
Some companies (especially well-funded startups) offer extended exercise windows often 7-10 years instead of 90 days. This removes the time pressure and lets you decide on your own timeline.
If your company offers extended exercise, you can delay the decision, monitor company progress, and exercise closer to a liquidity event.
Cashless Exercise (If Public)
If your company is public and you hold vested options, some brokers allow cashless exercise: They simultaneously exercise options and sell enough shares to cover the cost. You keep the net shares.
This eliminates the cash-outlay problem but only works for public companies.
Severance Packages (Layoffs)
If you're laid off rather than resigning, some companies extend the exercise window as part of severance. Negotiate for this if possible—an extra 60-90 days can make a big difference.
Your Job Change Equity Checklist
60 days before leaving (if planned departure):
- Review all equity grants: vesting schedules, exercise windows, strike prices
- Calculate unvested equity you'll forfeit
- Calculate exercise costs and tax implications for vested options
- Run financial scenarios: Is exercising worth it?
- Consult with a CPA who understands equity comp
- Consider whether staying through next vesting date makes sense
When you resign:
- Confirm your 90-day post-termination exercise window start date
- Get all equity documentation in writing
- Immediately begin the exercise decision process—don't wait
Within 30 days of leaving:
- Finalize decision: Exercise or walk away
- If exercising ISOs, file 83(b) election if required
- Arrange cash for exercise cost and taxes
- Execute trades
Within 90 days:
- Exercise vested options (if decided to proceed)
- Document everything for tax purposes
- Confirm shares are in your brokerage account
When Walking Away Is the Right Answer
Sometimes the smartest decision is to not exercise.
- You can't afford it without depleting emergency funds or taking on debt.
- The company's future is highly uncertain, and you'd be gambling six figures on a low-probability outcome.
- Liquidity is 5-10 years away, and you can't afford to lock up that much capital.
- Your new comp package is strong enough that forfeiting old equity doesn't materially impact your financial trajectory.
Walking away from unvested equity or unexercised options hurts emotionally. But protecting your financial stability matters more than capturing every possible dollar of equity upside.
Don't Let the 90-Day Clock Create Panic
Job changes are exciting and stressful. Don't let equity decisions become a crisis because you waited too long.
As soon as you're considering a job change, start reviewing your equity. Understand what you'd forfeit, what you'd keep, and what decisions you'd face.
And if you're already in the 90-day window, move fast. Talk to a CPA. Run the numbers. Make the decision. Don't let the clock run out because you were paralyzed by complexity.
Your equity is part of your compensation—but it's not worth destroying your financial stability or career trajectory to capture it.
This information is not intended to be a substitute for specific individualized tax or investment advice. We suggest that you discuss your specific situation with a qualified tax or financial advisor.
Please consult your tax professional regarding your specific tax situation.
Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual.
Advisors associated with Chesapeake Financial Planners may be either (1) LPL Financial Registered Representatives offering securities through LPL Financial, Member FINRA and SIPC, and investment advisor representatives offering investment advice through Great Valley Advisor Group; or (2) solely investment advisor representatives offering investment advice through Great Valley Advisor Group and not affiliated with LPL Financial. Great Valley Advisor Group, and Chesapeake Financial Planners are separate entities from LPL Financial.
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