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 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

The information contained in this presentation has been prepared by mystockoptions.com, who is responsible for its content.

This material is being provided to you for educational purposes only. The content has been written by a third party not affiliated with Morgan Stanley At Work. No information presented constitutes a recommendation by Morgan Stanley at Work to buy, sell, or hold any security, financial product, or instrument discussed therein or to engage in any specific investment strategy.

This material does not provide individually tailored investment advice and has been prepared without regard to the individual financial circumstances and objectives of persons who receive it.

Information contained herein has been obtained from sources considered to be reliable. Morgan Stanley Smith Barney LLC does not guarantee their accuracy or completeness.

Morgan Stanley at Work, Morgan Stanley Smith Barney LLC (“Morgan Stanley”), its affiliates and Morgan Stanley Financial Advisors or Private Wealth Advisors do not provide tax or legal advice. Clients should consult their tax advisor for matters involving taxation and tax planning and their attorney for legal matters.

This material may provide the addresses of, or contain hyperlinks to, websites. Except to the extent to which the material refers to website material of Morgan Stanley Wealth Management, the firm has not reviewed the linked site. Equally, except to the extent to which the material refers to website material of Morgan Stanley Wealth Management, the firm takes no responsibility for, and makes no representations or warranties whatsoever as to, the data and information contained therein. Such address or hyperlink (including addresses or hyperlinks to website material of Morgan Stanley Wealth Management) is provided solely for your convenience and information and the content of the linked site does not in any way form part of this document. Accessing such website or following such link through the material or the website of the firm shall be at your own risk and we shall have no liability arising out of, or in connection with, any such referenced website. Morgan Stanley Wealth Management is a business of Morgan Stanley Smith Barney LLC.

Morgan Stanley at Work services are provided by Morgan Stanley Smith Barney LLC, member SIPC, and its affiliates, all wholly owned subsidiaries of Morgan Stanley.

© 2025 Morgan Stanley Smith Barney LLC. Member SIPC.

CRC#4123395 (01/2025)

View Disclosures Close Disclosures