Meaning
Equity provisions within option plans or share agreements allow unvested equity to vest immediately upon specific corporate occurrences. The concept of accelerated vesting alters the standard chronological schedule by releasing equity grants earlier than scheduled when predefined triggers take place. Single trigger clauses accelerate options upon an acquisition, whereas double trigger clauses require both an acquisition and an involuntary termination of employment.
Contracts establish these terms to protect equity holders during ownership transitions.
Event Trigger
Contractual clauses define the precise circumstances under which non-standard equity distribution takes place. In transaction scenarios, accelerated vesting operates as a defensive mechanism for executive equity that would otherwise be cancelled or unhedged under new corporate ownership. Written notices must record the exact date and fulfillment of conditions precedent to enforce the change.
Failure to document trigger conditions converts early share transfers into unauthorized equity distributions.
Share Allocation
Cap tables record the exact shift in ownership percentages when equity transfers ahead of schedule. The calculation of accelerated vesting requires reconciling original vesting tables against post-trigger equity registers. A cap table update provides immediate proof of diluted ownership for existing investors.
Dispute Risk
Former equity holders often challenge the calculation or timing of early share releases when post-exit values diverge from expectations. Claims regarding accelerated vesting rely heavily on contemporaneous emails, board consent records, and written severance agreements rather than spoken understandings. Clear board approvals remove ambiguity regarding whether a termination met the criteria for double trigger provisions.
Without written board resolutions, early share distribution remains vulnerable to clawback demands.
