Definition
Single-trigger acceleration is a clause in employee stock option agreements that allows immediate vesting of unvested shares upon a predefined event, such as an acquisition.
Related Services
Common in startup compensation packages, this clause incentivizes employees and protects them during company transitions.
Problem and Application
Single-trigger acceleration can be a disadvantage for acquiring companies, as it may lead to key employees leaving post-acquisition. Many firms prefer double-trigger acceleration, which requires both an acquisition and termination of employment for full vesting.
Conclusion
While beneficial for employees, single-trigger acceleration can impact company valuation and acquisition negotiations.
