Lockup period

A lockup comes from a contract, which insiders usually sign with the IPO’s underwriters before the offering. The contract sets the length. Most lockups last 180 days, according to the SEC. The company must disclose the terms in its prospectus, so you can check your dates there.

Underwriters can release shares from a lockup early. For officers and directors, the lead underwriter must announce an early release at least 2 business days ahead.

A lockup does not delay tax. RSU shares are still taxed as wages when they are delivered. NSOs are still taxed on the spread (the stock’s value minus your strike price) when you exercise. ISOs you exercise during a lockup and hold past year end add the spread to your income for the alternative minimum tax (AMT). You can owe the tax before you are allowed to sell a share to pay it.