What happens to share options if a participant leaves the business?

It depends on why they left and how the plan rules and option agreements were drafted.   Most plans distinguish between “good leavers” and “bad leavers”.   If employees have already exercised options and acquired shares, this will usually be covered in the company’s Articles of Association.

Employees leaving through redundancy, retirement or other no-fault reasons are typically good leavers, and may benefit from accelerated or partial vesting, with a window after employment ends in which to exercise. Employees who resign, or are dismissed for gross misconduct, often lose all their options — including any that have already vested.

How leavers are handled is one of the more important design decisions in any share plan. Read our blog on what happens if someone leaves.