Modern Counsel for Growing Companies
In plain English
A contractual provision causing equity to vest sooner after specified events. Single-trigger acceleration requires one qualifying event; double-trigger acceleration requires two, commonly a change of control and a qualifying employment departure. The documents determine the events, timing, and portion of the award affected.
Types and key distinctions
Single-Trigger Acceleration
A provision accelerating equity vesting after one defined event, often a change of control. The trigger and the portion accelerated depend on the agreement. It differs from double-trigger acceleration, which requires an additional qualifying event, and from accelerating repayment of a loan.
Double-Trigger Acceleration
A provision accelerating equity vesting only after two specified events occur, commonly a change of control followed by termination without cause or resignation for defined good reason. The agreement determines the timing window and amount accelerated. A company sale alone may not satisfy the provision.
Good Reason
A contractually defined basis for an employee to resign and receive specified benefits, such as severance or vesting acceleration. It commonly addresses substantial reductions in duties, pay, or required relocation. Notice, an employer cure opportunity, and resignation deadlines may be necessary; personal dissatisfaction alone may not qualify.
Termination Without Cause
An employment termination that does not meet the agreement's definition of cause, or is expressly treated as without cause. It may trigger severance or vesting rights when the documents provide them. The phrase does not necessarily mean the termination was unlawful, unjustified, or prohibited under employment law.
Change of Control
An event that shifts control of a business, as defined in the relevant agreement. It may include a merger, stock sale, or sale of substantially all assets, but definitions vary. It can trigger consent rights, contract termination, payouts, or vesting acceleration.