What Happens to Your RSUs and Stock Options After a Layoff

You just got the call. Your role is being eliminated — and somewhere in the back of your mind, a second dread kicks in: What about my equity?

For tech and finance professionals, equity compensation can represent 30–70% of total pay. Unvested RSU grants worth $50,000, $100,000, or more hang in the balance when a layoff happens. Most employees assume it's all gone. The reality is more nuanced — and significantly more negotiable than your employer wants you to know.

This guide covers exactly what happens to every type of equity when you're laid off, what you're entitled to keep, and the negotiation window you have before you sign anything.

The 2026 Layoff Wave Has Put Millions of Equity Holders at Risk

Through April 2026, companies have filed 1,794 WARN Act notices affecting over 169,000 employees. Tech alone has seen more than 100,000 announced job cuts this year. Behind every one of those cuts is an employee with a grant agreement they probably haven't read since they were hired.

Google, Meta, Microsoft, Amazon, and Oracle have all run mass layoffs in the past 12 months. These companies offer substantial equity packages — which makes understanding your post-termination rights not a nice-to-have, but a financial imperative.

RSUs (Restricted Stock Units): What You Keep and What You Lose

RSUs are the most common form of equity at large public tech companies. Here's exactly how they work when you're laid off:

Vested RSUs: These Are Already Yours

Any RSU that has already vested belongs to you. Period. Once an RSU vests, the underlying shares are in your brokerage account (or will be transferred there). Your employment status has no bearing on shares you already own.

Action required: Confirm your brokerage account is not tied exclusively to your corporate email, and that you have login credentials for the external account (Schwab, Fidelity, E*TRADE, Morgan Stanley, etc.) where your shares are held.

Unvested RSUs: Forfeited by Default — But Negotiable

This is where most people lose money they didn't have to lose. When your employment ends, all unvested RSUs are cancelled and returned to the company's equity pool. If you had $80,000 in unvested grants scheduled to vest over the next two years, that money evaporates — unless you negotiate.

What changes this:

Accelerated vesting clauses in your original grant agreement (rare, but worth checking)
Severance agreement acceleration — the most common route, and one that requires active negotiation

Stock Options: The 90-Day Clock You Cannot Ignore

If your equity comes in the form of stock options (ISOs or NSOs), the rules are different — and the timing pressure is much greater.

The Standard Post-Termination Exercise Window

Most companies give terminated employees 90 days to exercise any vested stock options. After that window closes, the options expire worthless. This is one of the most financially devastating outcomes in a layoff, and it catches people completely off guard.

If you hold 10,000 vested options with a strike price of $20 and the stock trades at $35, that's $150,000 in value — but only if you exercise before the window slams shut.

ISOs vs. NSOs: A Critical Tax Difference

Incentive Stock Options (ISOs): Carry favorable tax treatment under IRS rules, but only if exercised within 90 days of termination. After that, they automatically convert to NSOs and lose the tax advantage.
Non-Qualified Stock Options (NSOs): Can sometimes be extended beyond 90 days at the company's discretion, but there's no IRS rule mandating favorable treatment either way.

Extended windows exist but are rare. About 10% of companies now offer post-termination exercise windows beyond 90 days — sometimes as long as 10 years. A small number of growth-stage startups have adopted this as a recruiting perk. Check your grant agreement or option plan documents immediately.

Unvested Options

Like unvested RSUs, unvested options are cancelled upon termination. No vesting cliff or partial schedule carries over unless your severance agreement says otherwise.

The Negotiation Window: Your Most Overlooked Leverage Point

Here's what most laid-off employees don't realize: the period between receiving your layoff notice and signing your severance agreement is your only window to negotiate equity outcomes.

Once you sign the release, your leverage is largely gone.

What to Negotiate

1. Accelerated vesting of upcoming grants The most financially significant ask. You're requesting that unvested grants scheduled to vest in the near future be accelerated to your termination date.

Both Google and Meta have recently included RSU acceleration provisions in their layoff severance packages:

Google: Accelerated vesting of RSUs scheduled within the next quarter, in addition to 16 weeks base pay
Meta: Acceleration of RSUs vesting within the three months following termination, plus 16 weeks base pay

These aren't universal — they're examples of what's been offered in specific layoff cycles. Your outcome depends on your tenure, role level, and how much legal exposure your termination carries.

2. Extended option exercise windows If you hold stock options, ask whether the company will extend your post-termination exercise window beyond the standard 90 days, especially if you need time to raise capital to exercise.

3. Treatment of cliff-vesting grants If you're within weeks of a one-year cliff vest, request acceleration to the cliff date. This is often easier to argue than full acceleration.

When Is Negotiation Most Likely to Succeed?

According to employment attorneys, RSU acceleration is most likely when:

Your termination comes close to a scheduled vesting date
The layoff affects a large group (mass reduction in force), creating legal exposure for the company
You're in a state like California with strong employee equity protections
Your specific grant agreement includes double-trigger or acceleration language
You haven't yet signed the severance release

The window is short. Most severance agreements come with a 21-day consideration period (45 days in a group layoff under ADEA rules). Use this time deliberately.

Step-by-Step: What to Do Within 48 Hours of a Layoff Notice

Follow this checklist before you sign anything:

Locate your equity grant agreements — Check your email, the company equity platform (Carta, Shareworks, E*TRADE), or your HR portal before system access is revoked
Document your unvested grant schedule — Screenshot or download your full vesting table. Note every upcoming vest date and the dollar value at current stock price
Check your vested shares and options — Confirm brokerage account access before your work email is cut off
Read the severance agreement equity section — Look for any mention of RSU treatment, option exercise periods, or acceleration language
Note your option exercise deadline — Calculate 90 days from your official termination date. Mark it on your calendar as a hard deadline
Consult an employment attorney or equity advisor — For grants worth more than $25,000, professional guidance typically pays for itself
Make a counteroffer on equity — Specifically request accelerated vesting of near-term grants and/or an extended exercise window
Do not exercise options under duress — Understand the tax implications before paying to exercise. ISOs exercised during layoff stress can trigger AMT liability

Tax Traps to Watch Out For

Equity and taxes are inseparable. A few landmines to know before you act:

RSU Taxes Are Already Paid

RSUs are taxed as ordinary income when they vest — not when you sell. If your RSUs already vested, you've already paid tax on them. Future gains (or losses) when you sell are taxed as capital gains.

ISO Exercise Can Trigger AMT

Exercising ISOs without selling in the same year can trigger the Alternative Minimum Tax, especially if the spread between strike price and fair market value is large. If you're exercising options post-layoff, model the AMT exposure before pulling the trigger.

NSO Exercise Is Always Ordinary Income

When you exercise NSOs, the spread (market price minus strike price) is taxed as ordinary income in the year of exercise — regardless of whether you sell. Plan for this withholding obligation.

Watch for Clawback Provisions

Some equity agreements contain clawback clauses that allow companies to reclaim vested shares or gains under certain conditions. Review your grant documents for this language, particularly if you're at a financial services firm subject to regulatory compensation rules.

Key Takeaways

Vested RSUs and shares are yours — confirm brokerage access before your email is cut
Unvested RSUs are forfeited by default, but accelerated vesting is negotiable before you sign the severance release
Stock options have a 90-day exercise deadline — mark this date immediately and understand the tax implications before exercising
ISOs lose their favorable tax treatment after 90 days and convert to NSOs
Google and Meta have set a precedent for including near-term RSU acceleration in layoff severance — use this as leverage
Never sign a severance release without reviewing the equity section — once signed, all leverage is gone
The 2026 layoff wave means companies are running large-scale reductions in force, which creates more legal exposure — and more negotiating room for employees

How LayoffReady Can Help

If you've just received a layoff notice, the financial complexity of equity, severance, and benefits decisions can be overwhelming. LayoffReady's layoff risk assessment helps you map your situation, and our resources walk you through each step — from protecting your financial runway to landing your next role faster.

Not laid off yet? Understanding your equity exposure now — before a layoff — puts you in a far stronger position. Check your company's layoff risk profile and run the numbers while you still have leverage.

What Happens to Your RSUs and Stock Options After a Layoff (2026 Guide)