Articles / When the agreement arrives
What happens to stock options and RSUs when you are laid off?
Why the separation date often matters more than the payment, how vesting and exercise windows usually work, and what to read before signing.
Last reviewed November 6, 2026. General information about California law, not legal advice.
The short answer
Vesting usually stops on your termination date, and options usually have a limited window to exercise after it, commonly 90 days. Both are set by your equity plan and award agreements, not by the separation letter. That makes the separation date in your agreement one of its most valuable terms.
Four dates that can differ
Your last day worked, your last day on payroll, your termination date and your benefits end date can all be different. Equity usually follows the termination date.
Vesting
Unvested awards generally stop vesting on the termination date. A vesting date a few weeks after your separation date can be worth more than the severance itself.
Exercise windows
Stock options usually must be exercised within a set period after termination. Ninety days is common, but your award agreement controls. Missing the window usually means losing the options.
What to read
- The equity plan and every award agreement the separation agreement refers to.
- Any clause that cancels vested equity if you breach the agreement or do not sign a second document.
- Any statement that vesting continues, compared with any other section on the same subject.
Tax treatment of equity depends on the type of award and your facts.
Common questions
Where are my equity rules written?
In the company's equity plan and your individual award agreements. A separation agreement often refers to them without attaching them.
Can the separation date be negotiated?
It is a term of the agreement, so people sometimes ask about it, especially when a vesting date is close.
Not legal advice
This article explains how California and federal rules generally work. It does not tell you what to do in your situation, and reading it does not create an attorney-client relationship. Every example on this site is a fictional story. For advice, seefree and low-cost help in California.