Video included! Do I forfeit my restricted stock if I leave the company before vesting?
Generally, leaving the company before the vesting date of restricted stock or RSUs causes the forfeiture of shares that have not vested. Exceptions can occur, depending on the terms of your employment agreement. Additionally, with certain types of termination (e.g. disability or retirement), your stock plan may continue the vesting and even accelerate it.
Graded Vesting And Cliff Vesting
In a graded vesting schedule, you keep the vested portion of the grant upon termination, but most commonly you forfeit the remainder. With cliff vesting, in which shares vest on an all-or-nothing basis according to length of employment or performance goals, you forfeit the entire grant if you leave before vesting.
Alert: Become familiar with the details of your vesting schedule to prevent losing grants that would have vested if you had worked longer at your company. Check whether delaying your departure would allow a meaningful amount of your outstanding restricted stock/RSU grants to vest.
Survey Shows Trends In Company Practices
In its 2021 Equity Incentives Design Survey, the National Association of Stock Plan Professionals (NASPP) observed the following trends in termination treatment among the companies in its survey group.
|Type of job termination||Treatment (percentage of companies)|
|Termination for cause||All unvested awards are forfeited (97%)|
|Involuntary termination (not for cause)||All unvested awards are forfeited (66%)|
|Normal resignation||All unvested awards are forfeited (95%)|
|Death||No awards are forfeited, and vesting accelerates for unvested awards (60%)|
|Disability||No awards are forfeited, and vesting accelerates for unvested awards (52%)|
|Normal retirement||All unvested awards are forfeited (32%)|
For the treatment of unvested stock options in job termination, see the related FAQ.
Got another minute? In just 60 seconds, the myStockOptions editor-in-chief runs through the top 5 things to consider about your equity comp before and after you leave your job: