Leaving a Bonus or Unvested Shares Behind: Negotiating a Buyout
Many senior moves stall at the same point.
The new role is right. The CEO wants you. The base salary works. Then you look at what you would leave behind: a bonus due in four months, a long-term incentive about to vest, shares built up over years. Suddenly the move costs real money.
Some leaders quietly walk away from the new role. Others accept and absorb the loss, then feel resentful for the first year. Both outcomes are avoidable.
What you would forfeit is a normal part of a senior offer conversation. New employers expect to discuss it. Many will make up some or all of it through a sign on bonus or a buyout award.
This article is general information only. It is not tax or legal advice. How payments and share awards are taxed depends on your situation and differs between Australia and New Zealand, so speak with a tax adviser before you agree a structure.
It covers what you might forfeit, how to work out the real value, how to raise it with the new employer, cash versus shares versus staged payments, clawback terms to watch and an example conversation.
What you might forfeit
Start with a full list. Senior leaders often forget items.
Short-term incentive. Your annual bonus, if you leave before the payment date. Some plans pay nothing if you have resigned, even after a full year of work.
Long-term incentive. Performance rights, options or share awards that have not yet vested.
Deferred bonus. Part of a past bonus held back and paid in later years.
Retention payments. Amounts payable if you stay to a set date.
Employee share plans. Matching shares that vest only if you stay.
Other benefits. Car allowance, paid study, extra leave or a pending pay review.
Check the plan rules for each item. What happens on resignation is usually set out there, and it often differs from what people assume. Your own company’s reward team or the plan documents will be the best source.
Working out the real value
Before you raise it, know your numbers. A vague “I would lose a lot” is easy to dismiss. A clear schedule is hard to ignore.
For each item, note:
The amount or number of shares.
The date it would pay or vest.
Any conditions, such as performance tests or board discretion.
A realistic value, not the best case.
Be honest about uncertainty. A bonus that depends on company results not yet known is worth less than a fixed retention payment. Performance rights with tough performance tests may never vest. A new employer will apply the same thinking, so it helps if you have already done it.
A simple table works well:
Short-term incentive for this year: target value, expected payment date, likely outcome based on results so far.
Long-term incentive tranche one: number of rights, vesting date, performance test status.
Long-term incentive tranche two: same detail.
Deferred bonus: amount, release date.
Ask your tax adviser how each item would be taxed if paid now versus later, and how a replacement payment might be treated. That affects which structure suits you.
Raising it with the new employer
Timing matters. Raise it once there is clear interest in you, usually at or just before the offer stage. Too early looks presumptuous. Too late can feel like a surprise.
Raise it as a practical issue to solve together, not a demand.
Be factual. Share the schedule, not a feeling.
Be reasonable. Use realistic values and acknowledge uncertainty.
Show commitment. Make it clear you want the role.
Give them options. Cash, shares or staged payments.
If a search consultant is involved, talk to them first. They can test the client’s appetite and help frame the request. For more on handling offers, see executive offer negotiation.
Cash, shares or staged payments
There are three common ways a new employer makes up forfeited value. Each suits different situations.
Cash sign on bonus. Simple and certain. Often paid in the first pay cycle or after a set period. Usually comes with a clawback if you leave early. Suits forfeited short-term bonuses.
Replacement share award. New shares or rights in the new company, often vesting on a similar timetable to what you gave up. Keeps you aligned with the new owners and spreads cost for them. Suits forfeited long-term incentives, especially in listed or private equity backed businesses.
Staged payments. Cash paid in parts over one or two years. Lower risk for the employer. Can feel like a retention payment, which it partly is.
Many buyouts mix the three. For example, a cash payment to cover this year’s bonus plus a share award to replace unvested long-term incentives.
Private equity owned businesses may offer management equity instead, which has its own terms and risks. Public sector and not-for-profit roles often have less room to move on buyouts, so expect a different conversation.
Each option is taxed differently, and the timing can matter a lot. This is where your tax adviser earns their fee.
Clawback terms to watch
Most sign on payments come with conditions. Read them closely.
Clawback period. How long you must stay before the payment is fully yours. Common periods range from one to two years, but they vary.
Pro rata or full repayment. Do you repay all of it if you leave one day early, or a reducing share over time?
Triggers. Does clawback apply only if you resign, or also if you are dismissed or made redundant? Ask for it not to apply if the employer ends the contract without cause.
Gross or net. Are you repaying the amount before or after tax? This can make a large difference. Ask your tax adviser.
Vesting conditions on replacement shares. Are they tied to performance tests, service only or both?
Ask for these terms in writing in the offer or contract, not just in an email. An employment lawyer can check them alongside the rest of the contract.
How search consultants see it
When I worked in executive search, forfeited incentives were one of the most common reasons strong candidates hesitated.
The conversations that went well were led by candidates who came prepared. They had a clear schedule, realistic values and a sense of what would be fair. They framed it as, “Here is what I would leave behind, how can we make this work?” Clients respected that, and most were willing to find a solution.
The ones that went badly started with a big number and no detail, or appeared at the last minute after the offer was agreed. That made the client feel ambushed and sometimes put the whole offer at risk.
Example conversation
You: “I am very keen on this role, and I want to be upfront about one issue. If I resign now, I forfeit this year’s bonus and a long-term incentive due to vest next year. I have put together a summary of the amounts and timing.”
CEO: “Thanks. What are you hoping for?”
You: “I am not looking to be paid for things that may not happen. For the bonus, a cash sign on payment around the target amount would be fair, given we are well into the year. For the long-term incentive, I would be comfortable with a replacement share award vesting over a similar period. I am open to how you structure it.”
CEO: “We could do the cash, with a twelve-month clawback. The shares I would need to take to the board.”
You: “That works for me. Could the clawback be pro rata, and not apply if the company ends my employment? I am happy to wait for the board on the shares.”
Calm, specific and flexible. For more on package conversations, see executive salary negotiation.
A quick self-check
Have you listed everything you would forfeit, with dates and values?
Are your values realistic rather than best case?
Have you spoken with a tax adviser about structure?
Have you read the clawback terms closely?
Your next step
Build a one-page schedule of what you would forfeit this week, then book time with your tax adviser before you raise it with any new employer.
If you want help planning a senior move and the offer that comes with it, my executive career transition support helps senior leaders make well-judged moves without leaving value on the table.
If a buyout question is holding up your next move, book a complimentary Clarity Session.
