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Double-trigger restricted stock units (RSUs) are a distinct form of equity compensation that requires two conditions before vesting. Instead of standard RSUs, these grants remain contingent on both employment duration and a qualifying liquidity event—generally an IPO or acquisition. But what happens if an employee departs before both triggers are met?
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Companies issue double-trigger RSUs to retain talent while aligning compensation with long-term business growth. For these RSUs to become fully vested, employees should fulfill the below asğects:
Until both conditions are met, the RSUs remain ineligible for conversion into company shares.
If an employee resigns or is terminated before both triggers occur, the fate of their RSUs changes in accordance with the company’s equity agreement. Typical scenarios can be listed as below:
No tax is owed on unvested RSUs. Since the shares do not legally belong to the employee until vesting, there are no tax implications if they are forfeited.
Double-trigger RSUs can be highly valuable. However, their benefits depend on continued employment and company performance. Employees should review RSU agreements to acknowledge forfeiture risks alongside tax implications.
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