Archive for the ‘accelerated vesting’ Category

Unlocking Your Golden Handcuffs: How Common is Accelerated Vesting on Change of Control?

“I’m negotiating my equity-compensation package. How frequently do people get accelerated vesting on change of control?” In private ventures, vesting of equity stakes is the major form of golden handcuffs (see posts here, here, and here) used to keep executives at their ventures. However, other terms, such as accelerated vesting on change of control (AVCoC), can shorten those vesting periods. (See Brad Feld’s description of AVCoC in the middle of this post, or the VentureHacks overview here.) I recently got an email from a serial entrepreneur who has been brought on as the head of finance and operations in a mobile-services start-up. One of his questions was: How often do new-venture executives get AVCoC? If it’s not common for them to get it, he wouldn’t push for it and would focus his negotiating leverage on another term, but if it’s common, he wanted to push hard for it. (He felt that the start-up might be the subject of M&A activity in the future, and had already experienced working for a large company after a prior venture of his had been acquired.) I decided to dive into our fresh CompStudy data on equity terms to examine how common AVCoC is within new-venture management teams. I took a look at three levels of data: What is the overall percentage of executives receiving AVCoC? Does the percentage differ by level in the organization (e.g., CEO vs. other C-level executives vs. VP-level executives)? And has the percentage been changing over the last few years? For these analyses, I combined our 2005, 2006, 2007, and 2008 IT datasets, which gave me a total of 6,053 executives from 1,202 private ventures. Overall, the percentage of executives receiving AVCoC was 65.5%. However, as shown in the chart below, the percentage varied from a high of 76.4% for […]

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