For several years, industry lore in the executive compensation world has held that to avoid a 409A violation (and the ensuing parade of horribles), double-trigger RSUs must have a term of no more than seven years from the date the RSU is granted in which the IPO must occur. And out of that arose a somewhat fraught question as to whether a 10-year term (or indeed any term in excess of seven years) is permitted.

To answer this question, we explore the thinking behind the double-trigger RSU design and the legal underpinnings under the substantial risk of forfeiture rules of Section 409A, including:

  • Rationale for the double-trigger RSU design;
  • Features of double-trigger RSU design; and
  • Liquidity events as a vesting condition


For more information on how we can partner with your organization on your incentive programs globally, visit our Executive Compensation & Incentives page.


Originally published in Corporate Taxation/Journal of Corporate Taxation (WG&L) Volume 49, Number 02, March/April 2022. Copyright 2022 Thomson Reuters/Tax & Accounting.

Find Out More About Our Services
We work with multinational businesses to manage all of their employment needs, from day-to-day human resources requirements to critical global business change projects.
View our Employment page