H ow LTIPs could (and should) influence the timing of any career move. Throughout my career, I have observed highly capable lawyers forgo substantial sums, into the tens of thousands of dollars, simply because they failed to analyse their vesting schedules before resigning. For any lawyer participating in a LTIP, several core considerations should inform the timing of a potential move: 💲 Vesting schedules are definitive and non-negotiable. Unvested awards are typically forfeited upon departure. It is therefore essential to understand precisely when each tranche vests and to align any transition timeline accordingly. 💲 The nature of the incentive materially affects its value. Time-based restricted stock offers a relatively predictable outcome. By contrast, performance-based equity introduces uncertainty, as vesting is contingent on the achievement of specified targets that may not yet have been met. A clear understanding of which structure applies, and the likelihood of vesting, is critical. 💲 The distinction between public and private companies is significant. In public companies, valuation is transparent and readily accessible through market pricing. In private companies, particularly those backed by private equity, liquidity is often uncertain and tied to future events such as a sale, recapitalisation, or initial public offering. This uncertainty should be carefully factored into any assessment of value. 💲 Total remuneration, not base salary, should drive decision-making. Focusing solely on an increase in fixed salary can obscure the economic reality of a move. It is essential to assess the full compensation picture, including the value of unvested equity that may be forfeited, against the prospective package on offer. Where a decision to move is made, a disciplined and informed approach can materially improve outcomes: ✔️ Review your vesting schedule in advance Establish a precise understanding of when awards vest and assess whether a short delay in departure would significantly affect the value realised. ✔️ Understand any exercise windows For stock options, there is typically a limited post-departure period in which they may be exercised. Failure to act within this window generally results in forfeiture. ✔️ Assess the availability of accelerated vesting provisions Certain plans include mechanisms for accelerated vesting in the event of a change of control or corporate restructuring. It is important to determine whether such provisions apply. ✔️ Approach exit negotiations strategically For key employees, the treatment of unvested awards may, in some circumstances, be subject to negotiation as part of departure arrangements. ✔️ Obtain formal written confirmation An LTIPs should be approached with the same level of diligence and scrutiny as any other significant financial asset. Verbal assurances should not be relied upon.
