Managing Employee Stock Options When Employees Leave
When an employee leaves your company, their stock options are handled according to your Plan Rules (also called your Plan, Equity Incentive Plan, or ESOP Plan), which outline the specific terms for your company's equity plan.
Buy-back provisions
Your Plan Rules contain buy-back provisions that give your company the right (but not the obligation) to repurchase shares from departing employees. The price depends on whether the employee is classified as a good leaver or bad leaver, as defined in your Plan Rules.
Managing options in Cake
For unvested options: Use the Lapse function to cancel unvested options and return them to your unallocated pool. These options can then be reallocated to other employees.
Learn how to cancel employee options (Lapse options)
For vested options that became shares: Process a share buy-back through Cake if the departing employee exercised their options and now holds shares.
Learn how to process share buy-backs
Streamlined off-boarding process
For a simplified workflow that handles all equity grants for one departing employee, including setting up post-termination exercise periods and managing multiple grants in one flow:
Key considerations
Always refer to your Plan Rules to determine the correct process for your company. The Plan Rules define what constitutes a good leaver versus bad leaver, and how Fair Market Value is determined for any buy-back transactions.
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