Do startups give refreshers?

A significant minority of startups, say 30–40\%, give refresher equity grants to long-term employees, some ad-hoc based on promotions and performance, others on what looks like a regular schedule.

What is a refresher compensation?

Usually when the word “refresh” is used in conjunction with ANY type of equity compensation it refers to a new grant or award that is separate from and layers on top of any old awards. Most commonly these new awards will have their own vesting schedule and perhaps new terms and conditions.

What is an equity refresh program?

In this program, employees receive a large equity grant upon hiring, and tenure-based refresh grants that are ¼ the size of their initial grant starting after their second year of employment and continuing every year thereafter.

What is an RSU grant?

Restricted stock units (RSUs) are a way your employer can grant you company shares. RSUs are nearly always worth something, even if the stock price drops dramatically. RSUs must vest before you can receive the underlying shares. Job termination usually stops vesting.

What are refresh options?

The refresh button, also known as the refresh option, is a function of all Internet browsers. It is used to ask the browser to send you the most updated version of the page you’re viewing.

What is a company refresher?

Silicon Valley companies often use RSU refreshers as a form of incentive for employees to stay with the company longer. In other words, employers will grant an RSU refresh to an employee in hopes that the employee stays with the company past the future vesting dates.

Do startups refresh equity?

How it works at startups. Startups can be especially hesitant to give refreshers, although many do have their own systems in place. One startup adviser estimates that only about 30-40\% of startups give equity refreshers to long-term employees.

What is Refresher bonus?

A refresher grant may be options or RSUs, and is granted to an existing employee to reward performance and make their vesting runway longer. Companies typically set refresher grants as a percentage of how much stock a current new hire would receive for the same role.

What is Google refresher?

Equity Refresher Grant Most Googlers are eligible for refresher grants. Managers plan refresher grants at the end of each year during compensation planning cycles. Overall, Google rewards top performers with merit pay increases, promotions and refresher equity grants.

Are RSUs or options better?

Stock options are only valuable if the market value of the stock is higher than the grant price at some point in the vesting period. Otherwise, you’re paying more for the shares than you could in theory sell them for. RSUs, meanwhile, are pure gain, as you don’t have to pay for them.

Why do companies grant refresh options?

Since most companies are growing and performing well, the option grants required to hire full-time employees at any given level decreases each year to reflect the lower risk profile of the Company. Finally, management teams can grant refresh options at their discretion to reward performance.

How much should you spend on annual refresh grants?

As a rule of thumb, the value of annual refresh grants after the third year of employment should equal 25\% of the cost of a full-time replacement hire. Since most companies are growing and performing well, the option grants required to hire full-time employees at any given level decreases each year to reflect the lower risk profile of the Company.

When is the best time to refresh a grant?

The best refresh programs offer an employee a new grant at year two or three, after 50-75\% of the employee’s initial grant has vested.

How much do refresh grants dilute stock options?

Keep in mind that when companies grant equity with refresh grants, they are diluting all existing shareholders as options are not free. Most companies dilute themselves by about 5\% per year (although there is a huge range in the amount of annual dilution) based on new hires, promotions and refresh grants.