Vested Options Can Die After You Leave: 3-Number Check

You are leaving a startup with vested options, and the grant agreement has a post-termination deadline. That deadline is the trap. In more than 70% of cases, vested stock option grants go unexercised. Run this 3-number check before the deadline, whether you are resigning or a layoff notice has landed:

• Post-termination exercise window: get the exact date from the grant agreement or in writing.
• All-in cash cost: calculate the exercise price at the latest 409A price, plus taxes, fees, or plan charges.
• Exercise route: confirm whether cashless, partial, or financed exercise is available.

The decision is a break-even comparison: if the value you expect to keep exceeds the all-in cash cost and a route covers the cash inside the window, exercise; if not, let the grant expire.

The deadline decides whether the option is still alive

A post-termination exercise window is the time after employment ends when you can still buy the shares. It starts when your employment ends, not when you stop working on a project. If the window has closed, the grant expires even if the shares were fully vested.

The window is written in your grant agreement, equity plan, or the company's standard form. Ask for the exact date in writing. A written date also protects you if the company later gives a different answer. If the company says it is standard, ask what standard means. A short window makes the decision urgent; a longer window gives you time to compare routes.

Do not assume the deadline moves because you are negotiating a new job, a severance package, or a return to work. The deadline belongs to the grant. If you are unsure, treat the deadline as real and plan around it.

The cash cost tells you whether acting is rational

The all-in cash cost is the money you must put up to exercise. It includes the exercise price for the shares you buy, plus any taxes, fees, or plan charges that apply. The 409A price is the company's latest fair-market-value price, and it starts the exercise calculation.

Start with the shares you plan to exercise. Multiply them by the exercise price. Add the taxes and fees you expect to pay. That total is the cash you need before you can own the shares. If you cannot produce that number, you cannot make the decision.

Compare the all-in cash cost with the value you expect to keep if you exercise. Compare that result with nothing, which is what you keep if you let the grant expire. If the value you expect to keep is below the cash cost, let it expire unless a route lowers your cash outlay.

A higher 409A price can make the same grant more expensive. A lower price can make it cheaper. The price starts the cash number, but it does not settle the decision.

The route options decide whether you can actually pay

Cashless exercise lets the company or a broker sell enough shares to cover the exercise cost and taxes. Partial exercise buys only some of the vested shares. Financed exercise borrows against the shares or gets a loan from a provider.

Each route changes the cash number: cashless can reduce your out-of-pocket cost but may reduce the shares you keep, partial exercise limits your risk but may leave some value behind, and financed exercise preserves shares while adding repayment risk.

Ask the company which routes are available to a former employee. Some plans allow only cash exercise. Cashless exercise may be available only under certain conditions. A broker may be required. Confirm the available route in writing before you plan the cash.

401(k) access changes the odds

About half of U.S. private companies on Carta's platform do not offer a 401(k) plan to employees. Employees with access to a workplace 401(k) have an option exercise rate of about 26.1%, compared with about 22.8% for employees without one. In a 500-employee company, that gap could correspond to about 15 additional employees exercising options.

Availability varies by size. On Carta's platform, 401(k) availability is 39% for companies with fewer than 25 employees and 49% for companies with 25 to 100 employees. On Carta's platform, firms with more than 500 employees offer 401(k) plans at about 60%, while the smallest firms offer them at roughly 40%.

SECURE 2.0, a retirement-law update, requires automatic enrollment for most new 401(k) and 403(b) retirement plans, with initial contribution rates between 3% and 10%. The data suggest that employees with more financial infrastructure are more likely to act on equity.