What happens to my unvested RSUs at layoff?

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Short answer: Unvested RSUs typically forfeit at layoff unless the severance agreement provides for acceleration. At public companies, this means cancellation. At private companies with double-trigger RSUs (requiring both time vesting and a liquidity event), unvested RSUs cancel and already-vested-but-unpaid RSUs may still pay out if the liquidity event occurs. Senior leaders should negotiate 6-12 months of accelerated RSU vesting in severance, which can be worth substantially more than the cash component.

Default RSU treatment at layoff

The standard treatment in most equity plans:

Vested RSUs that have already settled into shares: These are yours. They stay with you and you can sell them subject to any plan restrictions or insider trading windows.
Vested RSUs that haven't settled yet (uncommon outside private company double-trigger plans): Usually still pay out per the original schedule.
Unvested RSUs: Cancel at termination. Period.

The plan documents control. Read the equity plan and any specific grant agreement carefully. Companies sometimes have different treatment for involuntary vs voluntary termination, or for layoffs vs for-cause terminations.

Public vs private company RSUs

Public company RSUs:

Standard single-trigger time vesting. Each tranche vests on its scheduled date and converts to shares you own. At layoff, anything that hasn't vested yet cancels.

Example: 1,000 RSUs vesting quarterly over 4 years (62.5 per quarter). At 18 months, you've vested 6 quarters = 375 RSUs. The remaining 625 cancel at layoff.

The 375 vested shares are yours. Sell when allowed by trading windows.

Private company RSUs:

Often double-trigger: requires both time vesting AND a liquidity event (IPO or acquisition) to settle.

Time-vested but not yet liquidity-settled RSUs occupy a gray area at layoff:

Some plans cancel them entirely at termination (harsh)
Some plans preserve them and pay out if liquidity event occurs within a defined window post-termination (favorable to employee)
Some plans accelerate the liquidity-event condition for terminated employees (rare)

This treatment dramatically affects your equity value at separation. Read the plan documents carefully.

Double-trigger RSU mechanics

Double-trigger RSUs are common at late-stage private companies. The two triggers:

Time vesting: Normal vesting schedule (4 years, monthly, etc.)
Liquidity event: An IPO, acquisition, secondary tender offer, or other defined liquidity event

Both triggers must be met for the RSU to settle into shares. Until both are met, the RSU is a contingent claim, not actual ownership.

At layoff:

Time-vested but no liquidity event yet: Treatment varies by plan. The most favorable structures keep these RSUs alive for a defined post-termination window (often 6-12 months); the harshest cancel them immediately.
Not time-vested: Cancel.

If you have significant double-trigger RSUs at a pre-IPO company and you're laid off close to a potential IPO date, the treatment of time-vested-but-unpaid RSUs can be the largest dollar item in your separation. Read carefully and negotiate hard.

How to negotiate acceleration

The standard ask for senior leaders:

"Upon termination by Company without Cause, [N] additional months of vesting on Employee's outstanding RSU grants shall accelerate and become vested as of the termination date. The accelerated portion shall be calculated by applying [N] months of additional time to the standard vesting schedule of each grant."

For private company double-trigger RSUs, add:

"Time-vested RSUs (including those vested through the [N]-month acceleration above) shall remain eligible for liquidity-event settlement for a period of [12 / 24] months following termination, regardless of continued employment."

Typical practice:

VP: 6-12 months of acceleration
SVP: 12-18 months
C-Suite: 18-24 months or full vest

For pre-IPO companies, the liquidity-event extension is often more valuable than the time acceleration because the equity has no value until IPO regardless.

Worked examples

Example 1: Public company senior engineer

4,000 RSUs vesting quarterly over 4 years (250 per quarter)
8 quarters in at layoff = 2,000 vested, 2,000 unvested
Stock price: $80/share
Unvested value: $160,000
6-month acceleration (2 additional quarters): 500 RSUs = $40,000 additional value

A $40,000 swing for asking. Worth the negotiation.

Example 2: Private company VP

20,000 RSUs at last 409A valuation of $25/share
60% time-vested at layoff (12,000), 40% unvested (8,000)
Double-trigger means no liquidity event yet
Default plan: All RSUs cancel at termination
Negotiated outcome: 6-month time acceleration (2,000 more time-vested) and 18-month post-termination liquidity-event window
If IPO happens within 18 months at $50/share: 14,000 vested RSUs × $50 = $700,000

A $700,000 outcome contingent on negotiating two specific items in the severance. This is why senior leader separation negotiations focus heavily on equity treatment.

What to do next

Equity treatment at layoff is consistently the largest dollar item in senior severance negotiations. If you want a delivered review of your specific equity grants and severance agreement with cited recommendations, we deliver one in 24 hours for $199. See Severance Review.

Sources

Standard private and public company equity plan templates
Carta data on equity acceleration practice
IRC § 409A (deferred compensation timing rules applicable to RSU acceleration)

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.