What is an equity refresh, and how do I negotiate it?

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Short answer: An equity refresh is an additional equity grant given to existing employees on a regular cadence (typically annually) to maintain or grow their unvested equity stake over time. Without a refresh, an employee's effective compensation drops sharply in years 3-4 as the initial grant fully vests. Standard refresh: 25-50% of initial grant value annually, often tied to performance review. Most offers don't explicitly commit to refresh; explicit commitment language is highly negotiable.

The refresh problem

When you join a company, you typically receive an initial equity grant that vests over 4 years (with a 1-year cliff for most plans). At year 4, the entire grant has vested, and unless you receive a refresh, you have no unvested equity tied to your continued employment.

Without refresh, your year-by-year equity income looks like this:

Year	Initial grant vesting	Effective equity income
Year 1	25% (cliff)	25% of initial
Year 2	25%	25%
Year 3	25%	25%
Year 4	25%	25%
Year 5	0	0%

By year 5, your effective comp drops by the full equity portion of your original package. For most senior roles, this means a 30-60% effective comp cut in year 5 unless the company refreshes.

This is the retention cliff. Companies need to refresh equity to retain employees past year 3-4. Most companies do refresh, but they often refuse to commit to it in writing in the initial offer letter, leaving employees uncertain about long-term comp trajectory.

How refresh works in practice

A typical refresh structure:

Granted annually during performance review cycle (often February-April)
Sized as a percentage of the initial grant or as a defined fraction of comp
Vests on a 4-year schedule starting from the grant date
Subject to continued employment and performance review threshold

By year 5, an employee who has received annual refreshes since year 1 has overlapping vesting from the initial grant and multiple refreshes:

Year	Initial (25%/yr)	Year 2 refresh (25%/yr)	Year 3 refresh	Year 4 refresh	Total
Year 1	25%	-	-	-	25%
Year 2	25%	refresh granted (cliff)	-	-	25%
Year 3	25%	25%	refresh	-	50%
Year 4	25%	25%	25%	refresh	75%
Year 5	0%	25%	25%	25%	75%
Year 6	0%	0%	25%	25%	50%

With refresh, the employee's equity comp doesn't fall off the cliff in year 5. It maintains at a stable level.

Standard refresh amounts

Refresh sizing varies by company stage and role:

Company stage	Typical annual refresh as % of initial grant
Early-stage startup (pre-Series B)	15-25%, with substantial new grants on round closes
Growth-stage (Series B-D)	25-40%
Late-stage private / pre-IPO	30-50%
Public companies	30-50%, often tied to RSU performance and band

Senior roles tend toward the higher end of these ranges. Executive refresh can equal or exceed the initial grant in dollar terms each year.

Some companies use a "target equity comp" approach instead: setting a target annual equity comp number (e.g., $200K/year), then awarding refresh sized to maintain that ongoing equity comp level given existing unvested holdings. This is more sophisticated and tends to produce predictable outcomes for employees.

Negotiating refresh language

Most offer letters don't commit to refresh in writing. Your counter:

"Employee shall be eligible for annual refresh equity grants beginning [12 months from start date], sized at no less than [25-50]% of the initial grant value, subject to standard performance review. The refresh schedule shall be commensurate with peer practice at Company's stage and role level."

What makes this language work:

"Eligible for" language is what companies will accept; "guaranteed" is too strong for most companies
Floor percentage ("no less than X%") prevents minimal token refreshes
Performance review condition is fair to both sides
Peer practice reference ties the commitment to external benchmarks

Stronger language for senior roles:

"Employee shall receive annual equity refresh grants of no less than $[X] in grant date fair value, subject to standard performance review and any required board approval. The first refresh shall be granted no later than [12 months from start date]."

This sets a dollar floor, which is more concrete than a percentage.

Refresh vs new grant

Some companies distinguish between:

Refresh: Additional equity granted to existing employees on an ongoing basis
Top-up: One-time additional grant when the initial grant is sub-market or to retain specific employees
Promotion grant: Additional equity granted in connection with a level change
Retention grant: Special grant tied to specific retention commitments

For negotiation purposes, the language matters less than the commitment. Get the company to commit to ongoing equity grants on a defined cadence, regardless of label.

What to do next

If you want a delivered analysis of your offer's equity treatment (including refresh language or lack thereof), with peer benchmarks and recommended counter language, we deliver one in 24 hours for $199. See Offer Review.

Sources

Carta startup compensation reports (annual refresh data by stage)
Pave compensation benchmarks
Levels.fyi equity progression data
Standard equity plan documents from major law firms

Get your contract reviewed

If you want a delivered review of your specific document with cited authority and counter language, see https://trycounteroffer.com/offer.

Last updated: Sun May 31 2026 00:00:00 GMT+0000 (Coordinated Universal Time)

Counteroffer is a contract analysis service, not a law firm. This page is informational, not legal advice.