The Hidden Cost of Leaving
Most engineers focus on vesting schedules when evaluating equity. The more dangerous number is buried in the option agreement: the post-termination exercise window — almost always 90 days.
What the 90-Day Window Means:
When you leave a company (voluntarily or not), you have 90 days to exercise your vested options or they expire worthless. This is not a grace period — it is a hard deadline. After day 90, your vested options are gone.
The Cash Requirement:
Exercising options requires two checks:
1. To the company: Strike price × number of shares (to actually buy the shares).
2. To the IRS: Tax on the spread (ordinary income for NSOs, or AMT for ISOs).
For a Staff Engineer at a late-stage startup, this combined cost can easily reach $200,000–$500,000 or more. Most people do not have this cash liquid.
The Golden Handcuff Mechanism:
This is not accidental. The 90-day window combined with a high exercise cost creates a structural incentive to stay. If you cannot afford to exercise, you cannot afford to leave — your vested equity evaporates the moment you resign. This is called being golden handcuffed: you are technically wealthy on paper but financially trapped.
The Negotiation Lever — Extended Exercise Windows:
Some companies — particularly those competing aggressively for senior talent — offer extended post-termination exercise windows of 5 years or even 10 years. This eliminates the golden handcuff entirely. You can leave, wait for the liquidity event, and exercise only when you have cash or when the company goes public.
What to Ask Before Signing:
- "What is the post-termination exercise window?"
- "Does the company permit early exercise of unvested options?"
- "Has the company ever run a tender offer for employees?"
If the answer to the first question is "90 days" and the strike price is high relative to your savings, model the exit cost before accepting the offer — not after you want to leave.