Legal Question in Business Law in California

Re: When is a former company obligated to pay out a former employees stock optio

Look to your ESOP plan documents. They will tell you when your interest "vests" and you can receive payments pursuant to the distribution language in the plan documents. You may or may not be entitled to monies depending on when you left the company's employ. Also, the vesting schedule may be different for current employees. Read the documents carefully. They hold the answers.

Re: When is a former company obligated to pay out a former employees stock optio

The IRS rules governing qualified stock option plans contain quite a few references to time periods, either as minimum or maximum times for various events such as exercise, holding, etc. None that I know of or spotted during a quick look at the regulations seems to fit the five-year no-pay provision you mentioned, so it may be a purely private contract condition inserted by your employer...you should read a copy of the Plan and if you don't have one, I think the former employer should furnish it upon request.

If this is a non-qualified plan, the potential range of terms is even more wide open.

Read your ESOP agreement carefully, then ask for an explanation of the five-year hold period if it isn't obvious from the agreement. If you still aren't satisfied, see a lawyer that specializes in employment law or securities.