Clarifying Equity Double Triggers: RSUs and Acceleration

When the term ‘Double Trigger’ is used in equity compensation, they can refer to seemingly overlapping, but also slightly separate concepts. When referring to RSUs, they refer to the general conditions of how RSUs vest. When referring to vesting acceleration, they refer to the conditions that trigger an immediate and full vesting. These explanations probably still sound confusing, so let’s dive into the details with this week’s post!

What are Single Trigger RSUs?

Let’s start simple, you receive 48 RSUs on a 4-year vesting schedule with a 1 year cliff and monthly vesting afterwards. Single Trigger refers to the single condition, typically of time, that must be fulfilled to convert your RSUs to actual shares. In other words, after the first year, you receive 12 shares, and for every month after that, you receive 1 additional share.

What are Double Trigger RSUs?

Double Trigger RSUs build upon the 'single' trigger by adding a second, event-based trigger. Typically known as an exit event, the company has to IPO or be acquired for you to get your shares. As an employee, you have to meet both trigger conditions, time and exit event, to receive your shares. To learn about the benefits and risks of single vs. double trigger RSUs, we recommend this post from our Knowledge Partner, EquityFTW.

What is Single Trigger Acceleration?

While equity typically vests on a set schedule, a Single Trigger can accelerate that schedule with a triggering event. For example, founders and key personnel may negotiate that they vest their entire granted equity during the sale of a company as a reward for a successful exit. Or, they may negotiate a trigger if asked to leave the company without cause as protection for their founding contributions towards the company.

What is Double Trigger Acceleration?

Double Trigger, as the name implies, requires two events to be fulfilled to accelerate vesting. The most common combination is requiring both a sale of the company and the termination without cause of the employee within some time period (e.g. 1 year). In other words, if a founder was successful in selling their company, but was asked to leave shortly after, they should still reap the full rewards of their contributions towards the company.

What is Triple Trigger Acceleration?

This third trigger can arguably be folded into Double Trigger, but it extends the termination trigger with additional requirements such as:

1. You’re terminated not due to death or disability.

2. You’re resigning for Good Reason, such as a reduction in compensation, relocation, or negative change in job responsibilities.

3. You’re removed from the Board.

This type of acceleration blends terms typically negotiated by executives as part of their compensation package for public companies, and has surfaced in the startup community as well.

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We hope defining every type of trigger brings some clarity to what these somewhat overlapping terms mean. A trigger always refers to a condition that enables an outcome of granted equity into vested equity. There are different types of triggers and different combinations of triggers to achieve a result that may be favorable to the employee, or sometimes carry significant tax consequences. As always, we encourage everyone to learn more about the implications of their equity by reading the fine print!

For advocacy and beyond,
The Ask Ginkgo Team