Equity refresh grants are the recurring equity awards that companies issue to current employees on top of their original hire grant, typically on an annual or periodic basis. At public technology companies, they are a standard and anticipated component of total compensation. At private companies, they are negotiable, growing more prevalent, and according to our 2024 data represent the single most valuable negotiation item that senior candidates routinely overlook.
The scale of the difference between candidates who secure refresh policies and those who do not, measured across a 4-year tenure, is significant enough to merit its own analysis. A VP-level professional who joins with a $1.25 million initial equity grant and successfully negotiates a $420,000 annual refresh beginning in year 2 realizes, over 4 years, roughly $2.5 million in aggregate equity value. The identical professional without the refresh realizes $1.25 million. That $1.25 million gap was the product of raising a single question during the final negotiation round that most candidates never raise.
Where refresh grants are standard practice
At publicly traded technology companies, equity refresh grants are virtually universal at the VP level and above. The precise amounts and mechanics differ, but the presence of annual refreshes is taken for granted by both sides during negotiations. At late-stage private SaaS and AI-focused companies, annual refreshes have become sufficiently widespread that candidates should insist on written documentation of the policy rather than relying on a verbal assurance.
At PE-backed portfolio companies, refreshes are unusual in the conventional sense but are occasionally embedded within management incentive plans as milestone-driven additional vesting events rather than time-based annual awards. At family offices and smaller private firms, refreshes are negotiated on a case-by-case basis and may be entirely discretionary.
In our 2024 placement data, 78% of VP-level offers at public technology companies included documented annual refresh policies; 54% of VP-level offers at late-stage private companies included documented annual refresh policies; and just 22% of VP-level offers at PE-backed portfolio companies included documented annual refresh policies. If you are assessing a private company offer that lacks a documented refresh, there is meaningful room to negotiate.
How refresh grant amounts are determined
At public companies, refresh grants are generally calibrated as a percentage of base salary or as a proportion of the initial grant value, adjusted for the stock price at the time of issuance. Typical structures include:
- Proportion of initial grant: Annual refresh = 25% to 40% of the original grant value, adjusted for the current share price
- Fixed dollar value: Annual refresh = $X per year, specified in the offer letter
- Performance-linked: Annual refresh determined by the annual performance evaluation, with standard ranges documented
- Market-referenced: Annual refresh calibrated to sustain target total compensation relative to a peer group benchmark
The fixed-dollar structure favors the candidate in a declining-stock environment (the refresh preserves its value regardless of share price movement). The proportion-of-initial-grant structure is more advantageous in a rising-stock environment. Performance-linked structures introduce variability that should be weighed against historical payout patterns at the specific company.
The critical distinction: discretionary versus guaranteed
The most consequential difference in refresh policies is whether they are discretionary or guaranteed. A discretionary refresh is one the company may issue based on annual performance assessments and budget availability; a guaranteed refresh is one the company is contractually bound to deliver as long as you remain employed and in good standing.
In practice, the majority of refresh policies are characterized as "target" or "expected" rather than guaranteed. The company preserves the right to reduce or suspend refreshes during periods of financial difficulty. This discretion carries real consequences: companies that have cut discretionary refreshes during financial downturns have done exactly that, and employees who had factored expected refreshes into their total compensation projections have been materially impacted.
The negotiation objective is to convert as much of the refresh as possible from a discretionary expectation into a contractual obligation. Even when the full amount remains discretionary, securing a floor — "the minimum refresh for satisfactory performance shall be no less than $X" — in written form provides a meaningful layer of protection.
Effective approaches to negotiating the policy
Three specific conversational framings that consistently produce results in refresh policy negotiations:
"Would it be possible to include the refresh policy in the offer letter? I want to have a clear picture of what to anticipate in years 2 through 4 so I can evaluate the opportunity fully." This frames the request as seeking clarity, not making an adversarial demand.
"I understand the refresh will be tied to performance. What does a typical refresh look like for a VP who meets their performance objectives? I want to understand the complete compensation picture under normal execution assumptions." This quantifies the expected value without questioning the performance-based framework.
"Since the initial grant is set at $X, could we establish a minimum annual refresh of $Y applicable in years 2 through 4? I am comfortable with the total being adjusted upward based on performance; I simply want to understand the baseline." This is the negotiation request that directly targets a guaranteed minimum.
For perspective on how equity refresh policies have developed across different company types, our VP Engineering compensation report provides the most thorough current overview, and our earlier equity vesting article addresses the broader equity negotiation landscape.
Refresh complexities at private companies
At private companies, refresh grants carry a specific complication absent from public company contexts: the 409A valuation governs the tax treatment and economic value of each grant, and 409A assessments are updated on an irregular schedule — typically every 12 months unless a material event (a new funding round, an acquisition proposal) triggers an interim reassessment. This means that a "refresh grant" at a private company denominated in the same dollar amount as a previous grant may actually represent a substantially different equity stake depending on its timing relative to the most recent 409A.
The practical consequence: when negotiating an annual refresh policy at a private company, ensure the refresh is expressed as a percentage of fully diluted shares rather than a fixed dollar figure. A commitment of "$420,000 per year in equity" at a company whose 409A will be adjusted upward at its next funding round is a commitment to an indeterminate number of shares. A commitment of "0.05% of fully diluted per year" is a commitment with a defined relationship to the company’s actual equity structure irrespective of when the 409A is revised.
Furthermore, refresh grants at private companies are generally issued on standard 4-year vesting schedules from the new grant date. This means a refresh grant received in year 2 of your tenure has a vesting cliff in year 3 (one year after the grant) and continues vesting through year 6 of your employment. The layered vesting structure can generate substantial retention incentives — you are perpetually within multiple active vesting windows — but it also means the realized value of refreshes is significantly back-loaded compared to what a surface-level reading of the annual grant value would suggest.
Treating each refresh cycle as a separate negotiation
Even after you have secured a documented refresh policy, each annual refresh cycle presents its own negotiation opportunity. The policy establishes a floor; the actual grant can be negotiated above it. Senior professionals who approach each annual refresh as a fresh conversation — arriving prepared with external market benchmarks, their specific track record of contributions, and a defined ask — consistently secure above-floor refreshes at higher rates than those who passively accept whatever HR puts forward.
The annual refresh discussion also serves as the natural opening to revisit other equity terms. If the company has evolved materially since your original grant — grown faster than projected, completed a new funding round at a higher valuation, shifted its IPO timeline — the original equity economics may no longer accurately reflect the risk-reward profile of your position. The annual refresh conversation provides the most organic entry point for a broader dialogue about whether the existing equity structure adequately recognizes your contributions and the company’s current trajectory. For perspective on how equity refresh policies fit within overall VP-level compensation, see our VP Engineering compensation report.