Single & Double Trigger Acceleration

by Joe Wallin on June 29, 2011 in Business/Corporate Law with 2 Comments

Single Trigger Acceleration

Acceleration of vesting based on a single, specified, event, such as an acquisition or change of control. To be contrasted with double trigger acceleration, which is acceleration based on two events–such as a change of control and being terminated within a certain period of time after a change of control.

Double Trigger Acceleration

Acceleration of vesting based on two (2) events–first, an acquisition or change of control, followed by a termination of service (usually without cause).

Tagged:
  • Mike

    With a double trigger, how do you get compensated if the second trigger happens (termination) a couple of months after the sale when presumably the proceeds were all paid out? In other words, after the seller is paid millions for selling the company. who (buyer or seller) pays for the stock/stock option that is now vested after the double trigger acceleration and when is it paid for? Assume the agreement doesn’t address it.

    • joewallin

      Good question. Typically what we are talking about is fully vesting your options. So, for example, if you are fired without cause within a short period of time after the change of control, and your options vest in full as a result–then you could exercise and become a stockholder at such time whereas before you vested you could not. In my example, you would not have received any deal consideration with respect to the unvested shares, because the deal consideration would only have been paid to stockholders as of closing.

←
→