Chartered Accountant · ICAI M.No. 153926 · FRN 136869W
Vested vs unvested
The key distinction is vesting. Options that have already vested (met the time/milestone conditions) are generally yours to exercise, within an exercise window after leaving that the ESOP scheme specifies (often 30–90 days, sometimes longer). Options not yet vested typically lapse on exit — you lose them.
Reason for leaving matters
The scheme often treats exits differently: resignation (exercise vested within the window), termination for cause (may forfeit even vested options), retirement, death or disability (often more generous, with extended windows or accelerated vesting). Always read your grant letter and plan document for the exact terms. Terms vary widely — check yours before resigning.
A worked example
Example: you have 1,000 options, 600 vested, and resign — you can exercise the 600 vested within (say) 90 days (paying the exercise price and the perquisite tax), while the 400 unvested lapse. If you let the window pass without exercising, even the vested 600 are lost. Knowing the window before you leave is crucial. Our team can advise on your ESOP exit.