Nivi · September 24th, 2008
How common is accelerated vesting on change in control (AVCoC)? Noam Wasserman from HBS has the answer in Unlocking Your Golden Handcuffs:
“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.)…
“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 CEOs down to 46.3% for the Head of Human Resources. (I only show the positions for which I had at least 100 data points.)…
“I also analyzed AVCoC at the team level, which is the focus of your first (“side note”) point. At the team level, 36% of the teams (429 ventures) had a “mixed” approach to AVCoC, wherein some executives had AVCoC and some did not. In those ventures, executives would seem to have been negotiating AVCoC on a case-by-case basis, in the absence of a consistent plan adopted across the team/venture. Of the other ventures, 47% (561 ventures) had AVCoC across all of the executives in the survey. Those 47% might include some ventures that adopted a consistent plan and others where the AVCoC’s were put in place on a case-by-case basis. Finally, 17% did not have a single executive with AVCoC (yet?).”
There is also a great discussion of AVCoC in the comments to Noam’s post.