October 14, 2026
When you leave a startup, you keep your vested equity and lose the rest. Vested restricted stock stays yours, and the company can buy back your unvested shares at what you paid. Vested options must be exercised within a set window after you leave, usually 90 days, or they expire, and exercising means paying the exercise price and, often, tax. Before you resign, check your vesting date, your exercise window and what exercising will cost.
Key takeaways
Example: Kiera holds 48,000 restricted shares on a four-year schedule with a one-year cliff. She owns all 48,000 from day one, subject to the company’s repurchase right.
See Unvested Shares.
Unvested options are cancelled and go back to the option pool. Vested options can be exercised (you buy the shares at the exercise price) within the post-termination window, usually 90 days, though some companies offer longer. For ISOs, exercising more than three months after you leave means the option is taxed as an NSO. See NSO vs ISO.
Example: Kiera has 24,000 vested options with a $0.01 exercise price, so exercising costs $240. If the current 409A value is $0.50 per share, the difference (24,000 × $0.49 = $11,760) is taxable income for an NSO, and an alternative minimum tax item for an ISO. Talk to a tax advisor before you exercise.
See What Do I Need to Do When an Employee Quits?
This question is for founders. A company can lengthen the window in three ways: write a longer window into the plan for future grants, amend every outstanding option at once, or extend it for one person at a time when they leave. Each has a cost. Options that sit unexercised for years stay on the cap table, dilute everyone else and never return to the pool. Any ISO exercised more than three months after employment ends is taxed as an NSO, and extending the window on an option someone already holds is treated as a new grant, so if the stock has gone up since the original grant, the option stops being an ISO right away. Some investors and board members also see long windows as a red flag and will push back, and future investors may too.
Our default is to keep the standard 90-day window in the plan and let the board extend it case by case, for example for someone leaving on good terms after years of service, or as part of a negotiated separation. If you do extend, have the board approve it, and keep any offer to extend an ISO open for less than 30 days. An offer to change an ISO that stays open for 30 days or more turns it into an NSO even if the employee never accepts. See NSO vs ISO.
If the founder’s shares have a cliff, the company can buy back all of their shares at the original price. Vesting depends on each founder’s own continued service. Another founder stepping down doesn’t change it.
If you hold shares, you receive the same deal price per share as other holders of your class, after any liquidation preferences, and drag-along rights usually mean you can’t hold out. After an IPO, there’s typically a lock-up period, often 180 days, before you can sell. See Drag-Along Rights.
See our Stock Option Grant and Cap Table Cleanup services.
