Manage Equity Compensation

10 Questions to Ask About Your Equity Following a Layoff

Experiencing a layoff is never easy and raises many questions including how to manage your company equity after your job has ended.

Here are the 10 questions to ask about your stock options, Restricted Stock Units (RSUs), and Employer Stock Purchase Plan (ESPP) participation following a layoff.

1. What type of stock options do I have, and what happens if my employment is terminated before the option grant is fully vested?

2. How long does the company give me to exercise vested stock options after job termination, and how will my Incentive Stock Options (ISOs) be treated?

3. What do any severance provisions in my employment agreement say about outstanding grants of options or restricted stock/RSUs?

4. For stock options and restricted stock/RSUs, when does vesting stop? When I am given my notice of termination, on the actual date of job termination or on another date?

5. What are the implications of involuntary job loss for unvested restricted stock and RSUs? Would the treatment be the same for performance shares?

6. Will I forfeit my restricted stock or RSUs if my employment ends before the vesting date(s)?

7. Once my participation in the company ESPP ends, what will happen to the money that has been deducted from my paycheck to purchase ESPP shares?

8. If I am no longer an employee, will the company withhold taxes when I exercise stock options or SARs, or upon restricted stock/RSU vesting?

9. If my company rehires me, can my prior stock options or restricted stock/RSUs be reinstated?  

10. Is there a noncompete stipulation in my employment or severance agreement that could limit my freedom to work elsewhere or trigger a clawback of past gains?

Don’t forget you have continued access to view and manage your vested equity through the stock plan platform.

 

For more information on actions to consider after a layoff, visit the “Navigating Change” section of the Morgan Stanley at Work Learning Center

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