Changing Jobs? 5 Strategies to Ensure You Don’t Leave Money On The Table

Apr 12, 2022

The booming biopharma industry allows employees to make frequent career moves and take on more interesting and potentially more lucrative jobs. The demand for talent in middle and senior management is high — and therefore, companies must offer attractive compensation packages to attract and retain talent.

But before you hand in your resignation letter to your current employer, think about the various company stock grants you may be leaving behind and how to maximize their value before, during and after your career transition.

Here are five factors you should consider before making a career change:

1. Understand your company’s equity compensation rules 

Take time to read and understand your stock grant documents, as well as your initial offer letter, and store them in one place. These documents give you an in-depth analysis of what happens to your grants at termination and can be a base for negotiation for a favorable exit if you are laid off. Be sure you know who your stock plan administrator is and how to reach them when needed.

2. Understand your stock options

You have the right to exercise stock options that are vested. Therefore, you should know your vesting schedule and consider delaying your termination date if you are expecting a larger chunk of options that are due to vest in the near future. As for unvested options, you will have to forfeit them in nearly all cases when you leave an employer. Depending on your position and the nature of your departure from the firm, you might have an opportunity to negotiate a partial payout. Make sure you confirm when you will be able to exercise the options after terminating your employment. In most cases, employers allow 90 days; this should be spelled out in your termination letter. 

3. Know the special considerations for unvested restricted stock units, restricted stock and performance shares

If you leave your job voluntarily or you are terminated, you forfeit all unvested restricted stock units, restricted stock and performance shares. There are certain exceptions allowed, such as retirement, disability or an acquisition. Please remember that performance shares vest at the attainment of a certain target goal. In the case of termination, however, you forfeit performance shares as well, unless you delay your departure until those shares do finally vest.

4. Negotiate your severance package

When I help clients through career transitions, we often find that negotiating a severance package is possible, especially if the employer is laying them off. Some of the most common negotiable items include, but are not limited to, extending the exercise period after the termination and accelerating the vesting of stock grants. In the case of stock options, this might be more challenging — if you decide to negotiate the exercise period of incentive stock options beyond the 90-day period, they become non-qualified options. You need to think about the potential tax consequences in all of these areas and get the help of a qualified accountant.

5. Make key financial planning decisions 

There are certain financial planning strategies that you need to think about when you leave an employer. These decisions usually have to be made fairly fast, so be prepared. You have to take into consideration the increased tax liability in case you have to exercise a large number of options. With incentive stock options, the alternative minimum tax plays a big role as well. That’s why you need to have a good understanding of your overall investment strategy and how it can support your overall financial goals. This will allow you to make smart decisions when you’re making a career transition and protect the value of the equity compensation you have earned.

Want to learn more about how to navigate your equity compensation when changing jobs? Schedule a call today.



Securities offered through Commonwealth Financial Network®, member FINRA/SIPC, a Registered Investment Adviser. Advisory services offered through Freedom Trail Financial, LLC are separate and unrelated to Commonwealth. Freedom Trail Financial, LLC does not provide legal or tax advice. You should consult a legal or tax professional regarding your individual situation. This content is provided for general informational purposes only and should not be construed as individual advice. Freedom Trail Financial 75 Arlington Street Suite 5012 Boston, MA 02116 (617) 247-1112

See all Member News