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Courtesy of Itai Nevo, a partner in DLA Piper's Boston office, below is an informal survey of current
trends regarding single vs. double trigger stock option acceleration from DLA
Piper's Atlanta, Boston, Chicago, DC, Northern and Southern California, Reston,
Seattle and Texas offices.
(1) The common denominator (with some exceptions
described below) was a double trigger approach - typically 12 months, sometimes
18 months, following a sale event. This was the most common approach (as
opposed to single trigger) both geographically (East vs. West Coast) and across
stages of company maturity (i.e., seed stage through VC-backed).
(2) For the most part (see item 3 below),
acceleration terms were offered only to senior management and on an
agreement-basis rather than at the option plan level. When offered, full
acceleration was the most common approach with a recent slight trend toward
50-75% acceleration of unvested shares at the time of termination.
(3) Rank and file acceleration was not overly
common. Some Northern California- and Boston-based partners reported seeing an
emerging trend in affording vesting acceleration (generally double trigger) for
rank and file employees. If acceleration is in fact offered, rank and file
participants often got six to12 months or some partial percentage.
(4) In contrast to the above, founders often seem
to get single trigger acceleration (in part because it is becoming more common
for founders to self impose vesting upon formation before funding - perhaps
because they can negotiate with themselves on vesting terms). Most commonly,
the acceleration level is 100%.
(5) Of the DLA Piper offices polled, Northern
California and Boston responses showed a higher incidence of single-trigger
acceleration for senior management.
(6) For positions not expected to be retained
post-exit (most typically CFO), single trigger was more common.
(7) Obviously, executive leverage and unique
situations (e.g., company trying to attract top talent for a specific
role) generally trumps all of the above trends.
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