Equity refresh grants: the silent retention lever most founders mis-price.
Founders obsess over the initial grant and ignore the refresh. The data from 1,400 startup compensation packages says the opposite is correct: the refresh, not the initial grant, is what keeps your best engineers in year 3 and year 4 — and most founders are pricing it 40% too low.
Every founder I work with can quote, within 10 basis points, the equity grant they gave their first engineering hire. Almost none of them can tell me what that engineer's refresh grant will be in year 3. That asymmetry is expensive. The data from Pave's 2025 compensation report, covering 1,400 venture-backed startups, is unambiguous: the refresh grant is the dominant retention signal between year 3 and year 6, and the median startup is pricing it 40% below the level at which it actually moves retention.
Why the initial grant is the wrong lever to optimize
- By year 3, the initial grant is mostly vested and feels like income, not upside.
- The market re-prices your engineer every 12–18 months; your grant doesn't.
- Refreshes signal future-orientation; initial grants only signal past judgment.
- Refreshes can be tied to performance; initial grants almost never can.
- Big initial grant, no clear refresh policy.
- Engineer feels rich at year 1, exposed at year 3.
- Retention falls off a cliff at the 4-year vest cliff.
- Comp conversations happen at exit, not at renewal.
- Smaller initial grant, written refresh policy from day one.
- Annual top-up of 20–40% of the original grant for top performers.
- Vesting always extends 4 years forward — no cliff to fall off.
- Comp conversation is annual, planned, not reactive.
HR & Operations leader scaling global remote teams across Nepal, the Philippines, Australia, and the US. Tech-leaning writing lives on Medium.