Stock options and ESOPs when quitting
The short answer: when you quit, unvested equity is almost always forfeited, and vested stock options usually remain exercisable only for a short post-termination window, often around 90 days, before they expire worthless. Vested RSUs you already own stay yours. The expensive, avoidable mistake is missing the exercise window. Before you resign, get your vested amounts, exercise deadline, strike price, and tax treatment in writing, and treat any equity as a possible bonus, never as runway.
Options, RSUs, and ESOPs
Equity comes in a few forms and they behave differently when you leave. Stock options give you the right to buy shares at a fixed strike price; you have to exercise them, and pay, to own anything. RSUs turn into actual shares as they vest, with nothing to exercise. An ESOP or employee share scheme varies by country and plan but generally grants or lets you buy shares on set terms. The common thread on quitting: what has vested is broadly yours to keep or claim, and what has not vested is usually lost.
The exercise window trap
The detail that catches people out is the post-termination exercise window. Vested options do not stay open forever after you leave. A very common default gives you around 90 days to exercise, after which the options expire and the value, sometimes years of it, simply vanishes. Some companies have moved to longer windows, but you cannot assume that. This single deadline is why equity belongs near the top of your exit checklist: find the exact expiry date for your vested options before you choose a resignation date, not after.
Vesting and cliffs
Unvested options and unvested RSUs are typically forfeited the day you leave. That makes vesting dates a real factor in timing. If you are weeks from a cliff, the first big tranche that vests, or from a scheduled vesting date, the amount at stake can be large enough to influence when you resign. Pull your vesting schedule and mark what vests, and when, against your planned last day, exactly as you would check a bonus payment date.
Exercising: cost, risk, and tax
Deciding whether to exercise vested options within the window is rarely simple. Exercising means paying the strike price out of pocket, and at a private company the shares you receive may be illiquid for years and could still end up worth nothing. On top of the cash outlay, exercising can trigger tax based on the gap between the strike price and the share value, with another potential tax event when you eventually sell. The right answer depends on the cost, the realistic odds of a payout, and your tax position. This is one area where paying a qualified tax adviser before you act often saves far more than it costs.
What to ask HR before you resign
- How many options or RSUs are vested as of my planned last day?
- What is the exact post-termination exercise window and the expiry date for my vested options?
- What is my strike price and the current share valuation?
- How would exercising be taxed in my country, and are there withholding requirements?
Get the answers in writing. The deadlines are firm, the figures are often large, and a clear written record protects you if anything is disputed later.
Why equity is not runway
However promising your equity looks, do not build your quitting runway on it, particularly private-company equity, which is illiquid and uncertain. Options you have not exercised are not cash, and shares you cannot sell are not spendable. Size your runway from accessible savings in the runway calculator and your readiness in the quit calculator, and treat any equity that turns into real money as a bonus on top, not the foundation of the plan.
Plan on cash, not on equity
Check that your accessible savings cover a realistic gap on their own, before counting any equity. The quit calculator gives you a readiness band in about a minute.
Check my readinessFrequently asked questions
What happens to my stock options when I quit?
Unvested options are usually forfeited when you leave. Vested options typically remain exercisable only for a limited post-termination window, often around 90 days, after which they expire and become worthless. To keep their value you generally have to exercise, and pay for, the vested options within that window, so check the exact deadline before you resign.
What is a post-termination exercise window?
It is the limited period after you leave a company in which you can still exercise your vested stock options. A common default is 90 days, though some companies offer longer. Miss the window and vested options you earned simply expire, which is one of the most expensive and avoidable mistakes when quitting a startup.
Do I lose unvested shares if I quit?
Almost always, yes. Both unvested options and unvested RSUs are typically forfeited on the day you leave. If you are close to a vesting cliff or a scheduled vesting date, the value at stake can be significant, so it is worth checking your vesting schedule before choosing your resignation date.
What happens to RSUs when you leave a company?
Vested RSUs have generally already become shares you own, so they stay yours. Unvested RSUs are usually forfeited when you leave. Unlike options, RSUs do not need to be exercised, so the main question is simply how many have vested by your last day.
People also ask
Should I exercise my options before or after I quit?
It depends on cost, risk, and tax. Exercising vested options means paying the strike price, and at a private company those shares may be illiquid for years and still carry risk. Many people exercise within the window only after weighing the cash outlay, the tax impact, and the realistic chance of a future payout. This is a case where professional tax advice often pays for itself.
Are there taxes when I exercise options after quitting?
Often, yes, and the treatment depends on the option type and your country. Exercising can create a taxable event based on the difference between the strike price and the share value, and selling later can create another. Because the tax can be substantial and complex, confirm the consequences with a qualified adviser before you exercise.
What questions should I ask HR about equity before resigning?
Ask how many options or RSUs are vested as of your planned last day, the exact post-termination exercise window and expiry date, the strike price and current valuation, and how exercising would be taxed. Get the answers in writing, because the deadlines are firm and the value at stake is often large.
Should I count my equity in my quitting runway?
Generally no, especially private-company equity, which is illiquid and uncertain. Do not treat options or unsold shares as spendable runway. Base your runway on accessible cash, and treat any equity that turns into money as a bonus rather than the foundation of your plan.