Double Trigger RSUs at Lyft

Lyft / Eng YDrs26
Apr 19, 2018 20 Comments

My job at Lyft includes ~$320k in RSUs vesting over 4 years. I just realized that Lyft has a "double trigger" vesting system, so the RSUs don't fully vest until both the vesting cliffs have been reached (time) and there has been some sort of performance based targets (acquisition / IPO). The internal rhetoric is that this is for our convenience and to help the employees. I honestly don't know enough about the setup to understand what the trade offs are between this double trigger (which they are claiming is the bees knees) and any regular time-only vesting schedule.

Any insight?

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TOP 20 Comments
  • Palantir / Eng Smurf0
    If they didn’t have a double trigger, you’d owe income tax on the RSUs at vesting time. And you likely wouldn’t be able to pay it. So, it’s pretty much a necessity
    Apr 19, 2018 2
    • Lyft KingNerd
      This is it. If you owed 80k in taxes on rsus you can't sell, you'd be unhappy.
      Apr 20, 2018
    • Dropbox / Eng dropscope
      Actually it’s possible to withhold shares at vest time to cover taxes
      Mar 22
  • Lyft llFa64
    This is a pretty bullshit policy. The result is:

    1. It’s harder for you to leave. Technically the way it’s written they could just deny you all of your RSUs if you leave before IPO even if you meet the time requirement.

    2. It saves you tax now but means that all appreciation in lyft stock value becomes income rather than capital gains. This means your grant is worth ~20% less because of the higher tax rate in the long run.

    3. The right way to do this is to allow RSUs to vest with a tax event and then have the company offer to buy back just enough RSUs to give you the cash needed to pay the IRS. The reason Lyft doesn’t do this is that it costs them more cash so instead they shift that burden to you. This is what Dropbox did preipo when I was there.

    4. The new tax law actually allows employees of private companies to simply elect to defer taxes from RSU grants so this whole scheme is unnecessary now but continued because it locks in employees.
    Apr 20, 2018 11
    • Palantir / Eng Smurf0
      No, it’s not dependent on capital gains tax being lower. Actually CA has the same rate for capital gains and income. And this math is only looking at the federal 20% rate (which is actually 24% at the highest level)
      Apr 21, 2018
    • Facebook dejected
      You assume same 40% rate to 120k VS 200k! How that could be valid? CG tax is different that doesn’t depend on amount, but long VS short duration.
      May 15, 2018
    • Palantir / Eng Smurf0
      The difference in effective tax rate isn’t going to make up for the 12k.
      May 15, 2018
    • Facebook dejected
      I agree for what numbers you put. But your calculation assumes many parameters. You consider 100k grant, 1 year time, and 2x multiplier. What if stock grows 10x in X years on initial grant of $1M?
      May 16, 2018
    • Palantir / Eng Smurf0
      Still doesn’t matter. Highest bracket capital gains tax is 24% which you’ll pay on the appreciation. For this 10x example the appreciation is nearly the whole amount. So your effective tax rate would have to go up by nearly 24%. That won’t happen, The absolute highest you could possibly have is low 50s, and absolute lowest will be high 30s
      May 16, 2018
  • Lyft / Eng JSBG53
    there's a lot of misinformation in this thread. instead of listening to ignorant people in the internet I suggest you attend the RSU information session Lyft offers us and / or ask your questions to the stock plan folks. they are there to help.

    the double trigger is *only* a good thing. it just means our RSUs only become valuable (read: taxable) once you've 1) vested and 2) there's been a liquidity event like and IPO or acquisition (read: once they have tangible value and can be sold)
    Apr 20, 2018 0
  • Microsoft ZuckB
    It’s common for companies to have a time window after IPO, during which common stocks can’t be sold. Your second trigger is probably just that.
    Apr 19, 2018 0
  • A fun fact is that you have seven years from your grant date for the double trigger to fire otherwise you lose all your shares if you’re no longer at the company
    Apr 19, 2018 2
    • Lyft nomofeels
      Technically you still lose them if you ARE at the company. I imagine they're forced to give you a new grant otherwise would not make for happy employees
      Apr 20, 2018
    • Dropbox / Eng dropscope
      In some companies it’s 10 years, but still...
      Mar 22

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