Single trigger and double trigger RSU vesting
Single trigger RSUs vest purely on the passage of time, and shares are delivered as soon as each tranche vests, regardless of whether the company is public or has any liquidity. This is standard at public companies, where employees can sell shares on the open market immediately, following the same vesting rules used across other equity instruments.
Double trigger RSUs, common at private companies, require two conditions before shares are delivered: the time-based service condition, and a specific liquidity event such as an IPO or acquisition. An RSU can be fully time-vested for years and still deliver nothing if the company has not yet gone public or been acquired, at which point the second trigger fires and all previously time-vested units settle at once, as set out in the company's RSU plan document.
Tracking RSU delivery against liquidity event triggers
| Date | Event | Effect under double trigger |
|---|---|---|
| Year 1 | Employee joins, RSUs granted | Vesting clock starts |
| Year 3 | 50% time-vested | No shares delivered yet, second trigger not met |
| Year 5 | 100% time-vested | Still no delivery without a liquidity event |
| Year 6 | Company is acquired | All time-vested units settle at once |
Double trigger structures mean an employee's RSUs can sit fully time-vested for years without any shares or tax liability arising, which is the main reason private companies favour this structure over single trigger vesting and delay the taxation point along with it.
Forfeiting unvested restricted units on departure
- Unvested RSUs, whether single or double trigger, are almost always forfeited immediately when an employee leaves.
- Under double trigger plans, RSUs that are time-vested but awaiting the second trigger are typically also forfeited if the employee leaves before the liquidity event occurs, since delivery never happened.
- Some companies set an expiry period, commonly around seven years from grant, after which time-vested but undelivered double trigger RSUs lapse if no liquidity event has occurred.
- Good and bad leaver distinctions are less common for RSUs than for options, since there is no exercise decision to protect, but some plans still include them.
Vesting triggers people ask us about
- If my RSUs are fully time-vested, do I own the shares?
- Only under single trigger vesting. Under double trigger vesting, common at private companies, you do not receive shares until the second condition, usually a liquidity event, is also met.
- What happens to time-vested double trigger RSUs if I leave before an exit?
- They are typically forfeited, since no shares were ever delivered. This is one of the key risks employees should understand before accepting an RSU-heavy offer at a private company.
General information for founders, not legal or tax advice. Thresholds and rates change, so confirm the current position with an adviser in the relevant country before granting.