If you’re considering leaving your job, it’s normal to feel a mix of excitement and stress—especially when equity compensation is part of your pay. Stock options, restricted stock units (RSUs), and an employee stock purchase plan (ESPP) can add meaningful value, but the rules can be confusing and the deadlines can be unforgiving.
Below are the most important questions to ask before you give notice (or as soon as possible), so you can make decisions with clarity and avoid surprises. When possible, ask for answers in writing and keep copies of plan documents.
Start with the big picture: “What do I have, and what’s actually mine?”
1) Can you provide a complete inventory of my equity awards? Ask for a list that includes grant dates, number of shares, strike price (for options), vesting schedules, and whether each award is vested or unvested.
2) What happens to my unvested awards when I leave? Many plans require you to forfeit unvested options/RSUs if you resign, but the details matter (and can differ for retirement, layoff, disability, or a negotiated exit). Ask whether any awards accelerate, partially vest, or continue vesting.
3) Is any vesting scheduled soon—and how is the vesting date defined? Some plans reference a specific date, others require you to be employed through a vesting date or even through the end of a day/pay period. If you’re close to a vesting milestone, timing may matter.
Stock options: deadlines, taxes, and the “exercise” decision
4) What type of options do I have—Incentive Stock Options (ISOs) or Nonqualified Stock Options (NSOs)? This affects taxation and deadlines. If you’re not sure, ask your equity administrator or check your grant documents.
5) What is my post-termination exercise window (PTEW)? This is one of the biggest “gotchas.” Many plans shorten the exercise window to 90 days after termination (sometimes less), even if the original option term was 10 years. Confirm the exact deadline and what counts as “termination date.”
6) If I don’t exercise by the deadline, what happens? Typically, vested but unexercised options can expire and become worthless. Ask if any extension applies (often not), and confirm whether your options convert (for example, ISOs may effectively become NSOs after certain timelines).
7) What is the current fair market value (FMV) and how is it determined? For private companies, FMV may be based on a 409A valuation and can impact taxes and exercise cost. Ask for the most recent valuation date and whether an updated valuation is expected.
8) What are my exercise methods and cash requirements? Ask whether you can do a cash exercise, sell-to-cover, same-day sale (for public companies), net exercise, or use a broker. Understand what’s available and what fees may apply.
9) What are the potential tax issues I should understand before exercising? This is where a CPA can be invaluable. Questions to raise include:
- For ISOs: Could exercising trigger Alternative Minimum Tax (AMT)? What is the AMT “spread” (FMV minus strike price)?
- For NSOs: How is ordinary income recognized at exercise, and how will withholding work?
- If you exercise and hold shares: What are the holding periods for potential long-term capital gains treatment?
10) If the company is private, what is the path to liquidity—and what are the restrictions? Ask about transfer restrictions, repurchase rights, right of first refusal (ROFR), and whether there’s an internal tender offer history. Also ask how you would handle taxes if you can’t readily sell shares.
RSUs: what vests, what’s withheld, and what you can do with shares
11) What RSUs are vested today, and what is scheduled to vest in the next 6–12 months? RSUs often vest over time, and unvested RSUs are commonly forfeited upon leaving. Confirm your schedule and whether any upcoming vesting is tied to being employed on the vesting date.
12) How are taxes handled at vesting, and what withholding rate will be used? RSU vesting is typically taxable as ordinary income. Many companies withhold shares to cover taxes, but the default withholding may or may not align with your real tax bracket. Ask:
- Will withholding be done via share withholding or payroll cash withholding?
- Can you elect a higher supplemental withholding rate?
13) After RSUs vest, are there any holding requirements or trading restrictions? If the company is public, ask about blackout periods and trading windows. If private, ask about transfer restrictions and whether you’ll receive actual shares or a cash equivalent.
ESPP: purchase dates, refunds, and “what happens if I leave mid-period?”
14) Am I currently enrolled, and what are the key dates (offering period, purchase date, contribution schedule)? ESPP value often depends on purchase timing and lookback features. Confirm the next purchase date and whether you need to be actively employed on that date.
15) If I resign before the purchase date, what happens to my payroll contributions? Typically, contributions are refunded (often through payroll), but rules vary. Ask how quickly refunds are processed and whether any interest is paid (commonly not).
16) If I leave after shares are purchased, are there restrictions or holding requirements? If shares were already purchased, ask when you can sell and what your plan administrator requires (brokerage transfer steps, trading windows, etc.).
17) What are the tax rules for selling ESPP shares? ESPP taxation can be nuanced (qualifying vs. disqualifying dispositions). Ask what information you’ll receive on tax forms (e.g., Form 3922, if applicable) and what cost basis reporting to expect.
Administrative questions that prevent headaches later
18) Where can I find the official plan documents—and which document controls if there’s a conflict? Offer letters and summaries can be helpful, but the plan document typically governs. Ask for:
- Equity incentive plan
- Award agreements
- ESPP plan document
- Most recent prospectus/plan summary (if public)
19) Who is my point of contact after I leave, and how will I access my equity account? Confirm whether you’ll keep access to the equity portal, how login credentials are maintained, and how to update your address and tax residency.
20) Are there any non-compete, non-solicit, or claw-back provisions that could impact my awards? Some agreements allow the company to repurchase shares or cancel awards under certain conditions. This is an area where an employment attorney may be helpful.
Bringing it all together: a practical next step
If you’re feeling overwhelmed, you’re not alone. A helpful way to move forward is to gather the documents, list the deadlines (especially option exercise windows and ESPP purchase dates), and then map out a few scenarios: leaving now, leaving after the next vesting date, and leaving after a purchase date.
From there, it can be useful to coordinate with your tax professional and your financial advisor so your equity decisions fit into the bigger picture—cash flow, taxes, risk management, and your long-term goals. The right choice isn’t always “exercise everything” or “sell immediately.” It’s the choice that supports your next chapter with fewer surprises and more confidence.