Options Trading Tutorial

What happens to ESPP and Options after Leaving My Job?

I'm about to change jobs and i have some options, restricted stock units (RSU) AND shares of stock i bought via an employee stock purchase plan (ESPP). What happens to these shares once i leave the company?

Public Comments

1. Stock you own, such as the RSU and that purchased via ESPP, is yours. You can sell it whenever you like consistent with the rules for the RSU. The status of the options vary. You will have to read your option agreement. It should have several paragraphs on what happens if you leave the company. Typically, the options expire 30 days after you leave if you don't exercise them. There are complex tax implications for all these transactions. If you're not familiar with the tax laws you really should speak with an accountant before you do anything.
2. That depends on the fine print. With regards to the options, they may be fully vested (owned by you), partially vested (some of them are owned by you) or unvested (not owned by you). Typically options will vest a certain period of time after granting. If you were granted options in 2003 with a two year vesting period, this means they become yours in 2005. Any unvested options are lost when you leave the company. Any vested options are yours and you can exercise them as and when you see fit, or let them lapse. You will probably have to do this through your companies HR department. The same goes for the RSU. They become unrestricted when certain conditions have been met. If they have been met, then the stocks are yours. If not, you lose them. Lastly, it is very likely that the shares you own through the ESPP are yours from the moment you paid for them. Once again, you will have to contact your HR department to find out either how to sell them or how to get them registered in your name through a regular stockbroker.