What happens to your options when you leave
Leaving a company where you hold share options starts several clocks at once, and some of them are short. This guide maps the moving parts so nothing lapses unread.
The four questions that decide everything
- What's vested? Unvested options almost always lapse at termination (or at notice, or at the end of garden leave — the documents pick one; find out which).
- What's your leaver category? The plan rules typically treat good leavers and bad leavers differently for the vested portion too: good leavers commonly keep a window to exercise; bad leavers can lose vested options entirely.
- How long is the exercise window? Where a window exists, common drafting gives 90 days — sometimes six months, occasionally less. Miss it and vested options lapse, regardless of their value.
- What does exercising cost — in cash and in tax? Exercise means paying the strike price now, and for unapproved options usually an income-tax charge on the gain at exercise (see our EMI vs unapproved guide) — potentially before any way to sell the shares exists.
The EMI-specific clock
For EMI options, leaving employment is a disqualifying event. The tax advantages are generally preserved if exercise happens within 90 days; beyond that, growth starts drifting into income-tax territory. This 90-day mark is the single most consequential deadline in the whole leaving process for EMI holders, and it runs whether or not anyone reminds you.
The judgement call: exercise or walk away
Exercising as a leaver in a private company means paying real money for illiquid shares — which then sit inside someone else's compulsory-transfer machinery (our leaver guide covers what the articles can do next). The decision weighs the strike cost and tax charge against the realistic exit outlook and your leaver treatment as a shareholder afterwards. There's no universal answer; there is a correct calculation for your specific numbers, and it's worth doing on paper rather than on instinct — ideally before resigning, when timing is still a variable you control.
A pre-notice checklist
Before anything becomes irreversible: get the current option statement (grants, vested amounts, strike prices); read the plan rules' leaver and lapse provisions; confirm scheme type and any EMI valuation history; price the full exercise cost including tax; and diarise every deadline the documents create. An hour with the paperwork converts most of the anxiety here into arithmetic.
FAQ
Do I keep vested options automatically when I resign?
No — it depends on the plan rules and your leaver category. Some plans lapse everything on resignation; many give a 90-day window to exercise the vested portion. The rules document answers it precisely.
Can the company extend my exercise window?
Plans often give the board discretion to extend or to treat a leaver more generously. Discretion is worth asking for — politely, early, and in writing — but it isn't a right, and for EMI the 90-day tax clock runs independently of any extension.
What if I can't afford to exercise?
It's a common position: strike cost plus a dry tax charge can be substantial. Options include negotiating timing, partial exercise of the strongest tranches, or letting options lapse where the numbers genuinely don't work. Modelling the after-tax outcome at realistic exit values is what makes that choice a decision rather than a guess.