# Single-trigger vs. double-trigger RSU

Author: Jackie Ammon  
Read time: 6 minutes  
Published date: 2 April 2025

A double-trigger RSU structure is common, but single-trigger RSUs can have more benefits for employees of late-stage private companies. Learn more.

## Single-trigger vs. double-trigger RSUs

1. **Double-trigger RSUs** restrict full vesting until an [exit event](/content/uk/en/learn/startups/exit-strategies/index.html), at which point the employee can receive payment for their [stock in an acquisition](/content/uk/en/learn/equity/liquidity-events/acquisition/index.html) or sell enough stock on the public market to cover the applicable taxes.

2. **Single-trigger RSUs** allow vesting without an exit event, but separate vesting from settlement to control the timing of both the settlement and the subsequent tax obligation.

## What are double-trigger RSUs?

Double-trigger RSUs are a type of equity compensation that require two conditions to be met before they fully vest, the RSUs are settled and an employee can sell their shares. The two vesting conditions are usually time-based and event-based.

- **Time-based vesting:** The employee must stay with the company for a specified time period.

- **Event-based vesting:** The company must go through an exit event, like an [initial public offering (IPO)](/content/uk/en/learn/startups/exit-strategies/ipo/index.html) or [acquisition](/content/uk/en/learn/startups/exit-strategies/mergers-acquisitions/index.html).

Double-trigger RSUs are commonly issued by private companies to provide equity compensation for employees, while adding incentives that align with the company’s growth and long-term success. Double-trigger RSUs can also offer tax benefits to employees, as taxation is deferred until the second trigger is satisfied.

### Double-trigger RSU disadvantages

Although the double-trigger RSU model has historically been more common for private companies, it comes with downsides for employees. The liquidity vesting condition essentially blocks double-trigger RSU holders from participating in private market liquidity. A secondary transaction (such as a tender offer) typically doesn’t count as the second vesting condition.

### Waiving the second trigger

To help employees realize the value of their equity, companies that assign double-trigger vesting to RSUs may later decide to offer secondary liquidity to RSU holders _before_ the exit event condition is met. To do so, they’ll need to issue a partial waiver of the liquidity vesting condition.

### Double-trigger RSU taxation

For RSU grantees to defer income taxes until vesting is complete, the IRS requires that there be substantial risk of forfeiture. If a company issues multiple waivers of the second exit event trigger, the IRS will likely view it as removing that risk for all RSUs.

If your company wants to switch to RSUs to help build employee ownership, but you’re not planning an exit soon, single-trigger RSUs may be the better fit.

## What are single-trigger RSUs?

Single-trigger RSUs are a type of restricted stock unit that only have a time-based vesting condition and do not require an exit event to fully vest. Once the time-based vesting condition is met, employees are able to settle their RSUs and fully own the shares.

### Single-trigger RSU taxation

RSUs are taxed as supplemental income to the employee at the time they vest. In the case of double-trigger RSUs, employees gain liquidity at the same time as their shares vest. In the case of single-trigger RSUs, employees owe income taxes on the RSUs in the tax year the RSUs settle.

### Net settlement for single-trigger RSUs

To help employees cover the taxes due on settled RSUs, Carta uses net settlement. This means that when an employee’s RSUs settle, Carta will hold back a certain number of shares equal to the taxes that would be owed.

### How can I set up single-trigger RSUs?

If you’re considering switching to RSUs, ask your company’s law firm about single-trigger RSUs designed with private market liquidity in mind. If you’re wondering if it’s the right time to switch to RSUs: check out [Carta’s free option and RSU grant calculator](/content/uk/en/learn/resources/option-vs-rsu-calculator/?ir=classroom/index.html) to compare.