Meaning
Compensation provisions in startup agreements dictate that equity vesting is accelerated only when two distinct conditions are met sequentially. A double trigger mechanism typically requires both a change in the company’s ownership structure and the subsequent termination of the founder’s employment. The cost of this design is the high threshold it sets for the executive to realize their equity gains early.
This structure provides balanced protection for the organization, the founder and the acquiring entity.
Twofold Hurdle
Combining multiple corporate milestones ensures that equity does not accelerate simply because a sale occurs. Under a double trigger arrangement, the first event is almost always a change of control. The second event is the termination of the executive without cause within a specified window after the sale.
This combination protects the acquiring firm from immediate team departures.
Vesting Velocity
Speeding up the acquisition of shares is deferred until both criteria are fully satisfied. When a double trigger is activated, the unvested options convert to fully owned shares immediately upon the second event. This sudden acceleration allows the departed founder to exit with their earned equity intact.
The process avoids the friction of leaving value on the table.
Retention Benefit
Acquiring firms prefer these multi-part clauses because they encourage founders to stay during transition phases. By ensuring that equity only accelerates if they are terminated, the arrangement maintains the founder’s motivation to support the new leadership. This stability is highly valued by investors during corporate integrations.
It preserves operational knowledge during critical periods of organizational change, ensuring that the firm’s transition is handled smoothly without losing key institutional relationships.
