# What happens to my equity if I get laid off? > Counteroffer · Answers · severance > Source: https://trycounteroffer.com/answers/what-happens-to-equity-at-layoff **Short answer:** Vested equity is yours regardless of how you leave. Unvested equity typically forfeits at termination unless the severance agreement provides acceleration. Stock options have a post-termination exercise window (default 90 days) that you must use or lose. Senior leaders should negotiate 6-12 months of accelerated vesting and extended option exercise periods of 3-10 years. Equity treatment at layoff is one of the most negotiable and highest-dollar items in any severance package. ## On this page - [Vested vs unvested at layoff](#vested-vs-unvested-at-layoff) - [Stock option exercise windows](#stock-option-exercise-windows) - [RSU treatment](#rsu-treatment) - [Accelerated vesting](#accelerated-vesting) - [What to negotiate](#what-to-negotiate) ## Vested vs unvested at layoff The simple rule: vested equity is yours; unvested equity defaults to forfeiture unless the agreement provides otherwise. **Vested equity:** - Vested shares (RSUs already converted to shares, restricted stock that has vested) remain yours - Vested options remain yours, subject to the post-termination exercise window - Any retirement plans (401k, profit sharing) keep their vested portion **Unvested equity:** - Unvested RSUs typically cancel - Unvested options typically cancel - Unvested restricted stock typically reverts to the company at the original purchase price (often zero) - Performance shares typically cancel if performance period hasn't ended This default treatment is harsh. Senior leaders with significant unvested equity at involuntary termination can lose six-figure or seven-figure amounts overnight. The severance agreement is your opportunity to negotiate against this default. ## Stock option exercise windows Vested stock options have a post-termination exercise window. The standard default is 90 days from termination. After the window expires, the options are forfeited. For Incentive Stock Options (ISOs), the 90-day window is critical because options not exercised within 90 days lose their ISO status and convert to Non-Qualified Stock Options. This conversion changes the tax treatment significantly: - Before 90 days: Exercise can qualify for long-term capital gains treatment if held appropriately - After 90 days: Exercise produces ordinary income on the spread (FMV at exercise minus strike) For private company options, the 90-day window can force a difficult choice: exercise (paying the strike price plus AMT liability without knowing when liquidity will be available) or forfeit (losing the option value entirely). Negotiating an extended post-termination exercise period to 3-10 years is one of the highest-value asks in any severance negotiation for employees with significant option holdings. ## RSU treatment RSU treatment at layoff depends on the equity plan and the agreement: - **Public company RSUs**: Vested RSUs are already shares you own. Unvested RSUs typically cancel. - **Private company RSUs**: Often have double-trigger vesting (vest on both time AND a liquidity event). Unvested RSUs typically cancel at layoff. Already-vested-but-not-yet-paid RSUs (waiting for liquidity) may still vest if the liquidity event occurs. - **Performance RSUs / PSUs**: Treatment depends on whether the performance period has ended. Often pro-rated based on time served and projected achievement. The severance agreement can override default plan treatment by providing accelerated vesting or modified treatment. ## Accelerated vesting The most valuable negotiation item for senior leaders is accelerated vesting. Common forms: **Time-based acceleration**: A defined number of months of additional vesting beyond the actual separation date. Common: 6-12 months for VPs; 12-24 months for SVPs and C-suite. **Full acceleration**: 100% of unvested equity vests immediately. Common for C-suite and founders. Rare for non-executive roles. **Vesting through next scheduled event**: Acceleration through the next quarterly or annual vesting event. Modest but common for senior managers and directors. **Performance-based vesting (for PSUs)**: Pro-rated achievement at target through last day, paid at the normal payment date. Acceleration is typically structured as a benefit triggered by termination without Cause or resignation for Good Reason, not by general layoff alone. The Cause and Good Reason definitions matter. ## What to negotiate When negotiating equity treatment at layoff: 1. **Accelerated vesting**: 6-12 months at minimum for director-level and above 2. **Extended option exercise window**: 3-10 years to preserve option value and avoid ISO conversion 3. **RSU treatment if applicable**: Vesting through liquidity event for private company double-trigger RSUs 4. **PSU treatment**: Pro-rated target achievement through last day 5. **Equity grant date**: Vesting calculations should use actual separation date, not announcement date 6. **Right of First Refusal modifications**: If the company has ROFR on private company shares, request modifications to allow sale to fund tax obligations from acceleration For a Director with $200K of unvested equity at separation, even a modest 6-month acceleration is worth ~$25K. For a VP with $1M unvested, 12-month acceleration is worth ~$250K. These numbers can dwarf the cash severance. ## What to do next If you want a delivered analysis of your specific equity grants and what to negotiate at separation, we deliver one in 24 hours for $199. See [Severance Review](https://trycounteroffer.com/severance). ## Sources - Standard equity plan documents from major law firms - IRC § 422 (ISO requirements including the 90-day post-termination exercise period) - Carta data on acceleration practice at venture-backed companies --- ## Related answers - [What happens to my unvested RSUs at layoff?](https://trycounteroffer.com/answers/what-happens-to-unvested-rsus-at-layoff) - [How much severance should I get?](https://trycounteroffer.com/answers/how-much-severance-should-i-get) - [What's negotiable in a severance agreement?](https://trycounteroffer.com/answers/whats-negotiable-in-severance) ## Get your contract reviewed If you want a delivered review of your specific document with cited authority and counter language, see https://trycounteroffer.com/severance. Last updated: Sun May 31 2026 00:00:00 GMT+0000 (Coordinated Universal Time) _Counteroffer is a contract analysis service, not a law firm. This page is informational, not legal advice._