The initial equity grant is a hiring tool. The refresh grant is a retention tool. Founders who treat them as the same thing quietly lose their best people in year three and four — exactly when those people become most valuable.
1. Vesting milestone. Most companies refresh when a grant is 50 to 75 percent vested — usually around the 2.5 to 3 year mark on a standard four-year vest. Wait until the four-year cliff and you have already lost the recruiting battle to whoever offered fresh equity six months earlier. 2. Promotion. A meaningful level change (IC to manager, manager to director) should come with a refresh sized to bring total unvested equity in line with what a new hire at the new level would receive. 3. Exceptional performance. Off-cycle refreshes for the top 5 to 10 percent of performers, usually granted with the annual review.
The common mistake is refreshing at 100 percent of the original grant. That over-dilutes fast. The better mental model: at any point in time, a great employee should have roughly the same amount of unvested equity they would have if they were a new hire at their current level.
So if a Senior Engineer new hire gets 0.15 percent vesting over four years, a three-year Senior Engineer with 0.05 percent still unvested should receive a refresh grant of roughly 0.10 percent. Not 0.15. Not 0.20. That keeps the recruiting math honest without runaway dilution.
Refresh grants typically vest over four years with a one-year cliff, just like new hire grants. Two variations worth considering:
Stacked vesting. The refresh starts vesting immediately in parallel with the original grant. Simple but front-loads dilution.
Back-loaded refresh. The refresh cliff is set to match the end of the original vest — no vesting from the refresh until the original grant fully vests. Better retention effect but harder to explain.
Most mature companies use stacked vesting with an annual review cadence, so refreshes accumulate smoothly rather than in one big cliff.
Refresh grants typically consume 1 to 2 percent of the fully-diluted cap per year at a healthy growth-stage company. If your option pool cannot support that, you have a pool-top-up problem, not a refresh problem. Model it into the next round.
A refresh grant is a moment. Do not let it show up as a Carta email at 6 pm on a Tuesday. The manager should deliver it in a 1:1, explain the reasoning, and connect it to the person's trajectory at the company. The dollar value on paper matters less than the signal: we noticed, we invested, we want you here for the next four years.
That signal is what refresh grants actually buy. The equity is just how you pay for it.
