In Artuso v Vertex Pharmaceuticals, Inc, a terminated employee claimed that the forfeiture of his unvested stock options was a breach of his stock option agreement and that his termination was conducted in bad faith to deprive him of his unvested options. In affirming the dismissal of the lawsuit, the First Circuit Court of Appeals determined that the stock agreement allowed the plaintiff to exercise only those stock options which were vested at the time of termination and the vesting of the remaining options ceased at termination. The court also held that there was no evidence suggesting that the decision to terminate was made in bad faith, and accordingly entered judgment for the employer on plaintiff's claim for breach of the implied covenant of good faith and fair dealing.

The Artuso decision affirms that the specific terms and conditions of stock option agreements will govern the rights and responsibilities of the parties to the contract, and highlights the importance of having clear and unambiguous vesting and forfeiture language in the agreements.