Acceleration speeds up vesting when the company is sold. Single trigger vests unvested equity at the closing. Double trigger vests it only if the person is also terminated without cause, or resigns for good reason, within a set period after the closing, usually 12 months. Double trigger is the more common form for founders and executives who have acceleration. Single trigger is rare, and investors and buyers push back on it.
Key takeaways
- Double trigger is the more common form of acceleration for founders and executives, but many founder grants have no acceleration at all, and rank-and-file employees rarely get any.
- Single trigger is rare, and buyers often require it to be given up as a deal condition.
- “Cause” and “good reason” should be defined in the agreement.
- Double trigger only helps if the buyer takes over the unvested equity.
- The board can also accelerate vesting for someone who’s leaving, by approval and an amendment to the award.
What’s the difference between single and double trigger?
- Single trigger: unvested equity vests when the company is sold.
- Double trigger: two events are needed: the sale, and a termination without cause (or resignation for good reason) within the window after closing.
The window usually runs 9 to 18 months after closing, with 12 months the most common. Some agreements also cover a short period before closing, often up to three months, so a company can’t let someone go just before a sale to avoid the acceleration. Separately, a few executive agreements accelerate vesting on a termination without cause even when there’s no sale. That works as a severance term, and because it makes the executive expensive to replace, investors resist it. See Vesting Schedule.
Why do investors and buyers prefer double trigger?
A buyer is paying partly for the team. If key people fully vest at closing, they can walk away, so the buyer either pays less or requires them to re-vest. Investors accept double trigger and resist single trigger for the same reason. Double trigger keeps the incentive to stay while protecting people who are let go after the deal.
What if the buyer doesn’t take over the equity?
Double trigger only protects you if your unvested equity survives the deal. Buyers often have their own incentive plans, and the merger agreement may cancel unvested awards at closing instead of having the buyer assume or replace them. If that happens, there’s nothing left to accelerate when the second trigger hits.
What counts as cause and good reason?
“Cause” usually means fraud, a felony, material breach or willful misconduct, often after notice and a chance to fix it. “Good reason” usually means a material pay cut, a material reduction in duties, or a required relocation. Define both in the stock purchase agreement or grant.
What does double-trigger language look like?
If, within 12 months after a Change of Control, the Company terminates the Purchaser’s service without Cause or the Purchaser resigns for Good Reason, 100% of the then-unvested Shares shall vest immediately.
Acceleration doesn’t have to be all or nothing. An agreement can accelerate part of the unvested equity, such as 25% or 50%, or an extra 12 months of vesting. Full acceleration on a double trigger is common for founders.
Can the board accelerate vesting for someone who’s leaving?
Yes. It takes a board approval and an amendment to the award. Check for investor approval rights, and talk to a tax advisor about the effect.
Related: Vesting Schedule · Stock Options in an Acquisition · Leaving the Company · Stock Grant
