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

> Counteroffer · Answers · offer
> Source: https://trycounteroffer.com/answers/what-is-equity-refresh


**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.

## On this page
- [The refresh problem](#the-refresh-problem)
- [How refresh works in practice](#how-refresh-works-in-practice)
- [Standard refresh amounts](#standard-refresh-amounts)
- [Negotiating refresh language](#negotiating-refresh-language)
- [Refresh vs new grant](#refresh-vs-new-grant)

## 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 | Refresh equity | Effective equity income |
|---|---|---|---|
| Year 1 | 25% (cliff) | 0 | 25% of initial |
| Year 2 | 25% | 0 | 25% |
| Year 3 | 25% | 0 | 25% |
| Year 4 | 25% | 0 | 25% |
| Year 5 | 0 | 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](https://trycounteroffer.com/offer).

## 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

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## Related answers
- [What's negotiable in a job offer?](https://trycounteroffer.com/answers/whats-negotiable-in-job-offer)
- [What is double-trigger acceleration?](https://trycounteroffer.com/answers/what-is-double-trigger-acceleration)
- [How do I negotiate a job offer?](https://trycounteroffer.com/answers/how-to-negotiate-a-job-offer)

## Get your contract reviewed
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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._