Table of Contents
- 1 What is a single trigger acceleration?
- 2 Who should get double trigger acceleration?
- 3 Is single trigger better than double trigger?
- 4 What does a double trigger mean?
- 5 What does it mean to accelerate options?
- 6 What is a typical strike price?
- 7 When is an acceleration clause not triggered?
- 8 What is single-trigger acceleration based on involuntary termination?
What is a single trigger acceleration?
Single-trigger acceleration refers to the partial or full acceleration of vesting of someone’s options or stock based on the occurrence of a single event, i.e. that event is the “trigger” for acceleration. Double-trigger acceleration refers to acceleration based on the occurrence of two distinct events.
Who should get double trigger acceleration?
Double-trigger acceleration is standard for stock issued to founders, and is occasionally used for executive-level hires. It is not typically given to other employees or consultants, because it is viewed as undesirable by acquirers and consequently VCs.
How common is single trigger acceleration?
The most common acceleration agreement these days combines 25\% – 50\% single trigger acceleration with 50\% – 100\% double trigger acceleration. The median of this range is probably 50\% single trigger combined with 100\% double trigger.
What does double trigger acceleration mean?
Double trigger acceleration requires the occurrence of two events for vesting acceleration to occur. Typically, this is a change of control and either termination without cause or the employee terminates for good reason.
Is single trigger better than double trigger?
Summary. Single-trigger accelerations cause the full or partial vesting of employee stock. Double-trigger accelerations are more popular in the startup world today. If an employee leaves for “good reason” (e.g. changing roles) they may also trigger an acceleration of the vesting of their stock options.
What does a double trigger mean?
Double Trigger means a Change in Control (“first trigger”) and a Qualifying Termination of the executive’s employment by the company without Cause or by the executive with Good Reason (“second trigger”).
Is single-trigger better than double trigger?
What is a vesting trigger?
Single-trigger, as discussed above, provides that at a sale or change of control, some or all of the restricted stock will immediately become vested. A double-trigger typically starts with the sale or change of control but does not cause acceleration until a second event occurs.
What does it mean to accelerate options?
An accelerated option is a clause in an insurance contract that allows the policyholder to receive part of the cash benefit sooner than it would normally be paid. Accelerated options, also referred to as accelerated benefits, normally come in the form of a rider to a contract.
What is a typical strike price?
Your stock option strike price is usually equal to the FMV of the company’s stock on the day the option is granted. It’s easy for public companies to determine their strike price: all they have to do is look at what the stock is currently trading at. That’s the price that people are willing to pay on the open market.
What should I ask for in a compensation package?
Total compensation packages include:
- employer contribution to health insurance.
- life and disability insurance.
- stock options.
- deferred compensation.
- travel allowance.
- parking (especially if you work in a city with expensive parking lots!).
- paid vacation.
- personal days.
What is double-trigger acceleration?
Double-trigger acceleration refers to acceleration based on the occurrence of two distinct events. In that case, each event is a “trigger” and if both events occur, that constitutes a “double trigger.”
When is an acceleration clause not triggered?
However, the acceleration clause is normally not triggered in such a case if the sale or transfer the loan is made due to the death of the borrower and the transfer is made to the heirs of the deceased’s estate. An acceleration clause may also be triggered by events outside of the loan agreement.
What is single-trigger acceleration based on involuntary termination?
Single-trigger acceleration based on involuntary termination is somewhat more unusual and introduces a different set of issues, in that vesting becomes less about the employee being effective enough to keep his or her job than about the financial consequences of letting him or her go.
Will single-trigger acceleration turn off potential acquirers?
Investors tend to dislike single-trigger acceleration upon a sale out of concern that it will turn off a potential acquirer. An acquirer typically wants to secure the ongoing services of key team members so as to ensure continued performance of the business and smooth integration into the acquirer’s business.