Equity, Ownership & Dilution Beginner

Unvested Shares

Shares or options you have been granted but have not yet earned through vesting.

Definition

Unvested shares are the portion of your equity grant that you have not yet earned. If you leave the company before these shares vest, you forfeit them. For stock options, unvested options cannot be exercised. For RSUs, unvested RSUs will not be delivered to you. Unvested equity is the company's primary retention tool.

Why it matters

Unvested equity is the golden handcuff. When considering leaving, calculate the value of what you would forfeit. Some companies offer acceleration clauses that speed up vesting under certain conditions like acquisition.

Example

You are 18 months into a 4-year grant of 40,000 options. You have 15,000 vested and 25,000 unvested. If you leave now, you walk away from 25,000 options. At a $5 spread per share, that is $125,000 in forgone value.

Related terms

Vested Shares
Shares or options you have earned through time-based or milestone-based vesting.
Vesting
The process of earning your equity over time, typically over a four-year period.
Vesting Cliff
The initial period (usually one year) during which no equity vests at all.
Double-Trigger Acceleration
Accelerated vesting that requires both an acquisition AND termination of the employee.
Single-Trigger Acceleration
Accelerated vesting triggered by just one event, usually an acquisition, regardless of employment status.
Refresh Grant
Additional equity granted to existing employees, usually annually, to maintain retention incentives.

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This definition is an educational summary. It is not legal, tax, or investment advice. Specific terms in your equity grant or company documents may differ.