When a separation agreement lands on your desk, the instinct is to focus on the headline number: the cash severance. How many weeks of salary, whether benefits continue, and what conditions are attached. That focus is understandable. It is also incomplete.
If restricted stock units are part of your compensation package, those unvested shares represent real money. And in far too many cases, executives sign separation agreements without ever raising the question of equity acceleration. Some assume the company would never agree to it. Others simply don’t know it’s negotiable. Either way, the result is the same: a potentially significant amount of compensation is left behind.
Before you sign, there are a few things you should understand.
RSUs Are Compensation, Not a Bonus
Restricted stock units are granted as part of your total compensation. They vest over time according to a schedule, and that schedule is typically tied to continued employment. When your employment ends, the unvested portion doesn’t automatically vanish by operation of law. What happens to those shares depends on the terms of your equity plan, any employment agreement you have, and what is negotiated in your separation.
This is an important distinction. Many executives are told, or simply assume, that unvested RSUs are forfeited upon separation as a matter of course. That may be the default position. It is not necessarily the final one.
Start With Your Employment Agreement
If you were hired under an executive employment agreement, that document is where your analysis should begin. Equity acceleration provisions are commonly negotiated at the outset of employment, particularly at the senior executive level. These provisions can require the company to accelerate some or all of your unvested RSUs upon certain triggering events, including termination without cause, a change in control, or both.
If your employment agreement contains an acceleration clause, the company has a contractual obligation. That is not a concession you are asking for. It is a commitment they already made. Review the language carefully, including the specific triggering conditions, and make sure your separation agreement reflects those rights.
No Employment Agreement? Acceleration May Still Be on the Table
The absence of an employment agreement does not close the door on negotiating your equity. Most equity incentive plans are administered by the company’s board of directors, and most plans vest the board with broad discretion to accelerate vesting outside of the plan’s standard schedule.
In practice, this means that even if the plan only mandates acceleration in specific circumstances such as death or disability, the board often retains the authority to grant acceleration as a business matter. Whether the company will use that discretion in your favor depends on the facts: your tenure, your role, the circumstances of your departure, and the leverage you bring to the negotiation.
Companies negotiate separation terms for many reasons. Avoiding litigation is one of them. An experienced attorney can identify the facts in your situation that give you the most credible grounds for requesting acceleration and frame the ask in a way the company is more likely to take seriously.
The Cost of Not Asking
Equity compensation is often the most significant component of an executive’s total pay. Depending on how long you have been with the company and where the stock price stands, a portion of your unvested RSUs could represent a year’s salary or more. The company will not typically bring this up on its own. The severance offer you receive is a starting point, and it is structured to benefit the company.
Failing to address your unvested RSUs in the negotiation is not a neutral outcome. It is leaving compensation on the table that may have been recoverable.
What to Do Before You Sign
The first step is to gather your documents: your employment agreement if you have one, your equity grant agreements, and the company’s equity plan. These will tell you what rights you have, what the company is already obligated to provide, and where there may be room to negotiate.
The second step is to get proper advice before responding to the company. Separation agreements almost always include a deadline. The pressure is intentional. But signing quickly without understanding your full position is a mistake that cannot easily be undone. Once you sign, those rights are generally gone.
An employment attorney who handles executive matters can review your agreements, assess your leverage, and negotiate on your behalf. That representation can make a material difference in the outcome, both in cash severance and in equity.
The Bottom Line
Restricted stock units represent real value. When your employment ends, that value is not automatically forfeited, and it is not off the negotiating table. Whether your path to acceleration runs through a contractual provision or through a board’s discretionary authority, the question deserves to be raised and answered before you sign anything.
At Altus Law Firm, we represent executives in severance negotiations throughout California, including disputes involving equity compensation. If you have received a separation agreement and want to understand your options, contact our office for a consultation.