What is a stock refresher? Definition and examples

by Josh Doody

What is a stock refresher?

Definition: A stock refresher is a stock grant given to an existing employee as additional compensation.

Refreshers are similar to initial stock grants—usually the same stock or RSUs, often the same vesting schedule—but serve a different purpose. Whereas an initial stock grant is designed to offer compensation and entice candidates to join the company, a stock refresher is usually somewhat or entirely performance based and is designed to keep strong candidates at a company once their initial stock grant has vested or as their compensation begins to stagnate.

Stock refreshers can be used to serve one or both of these functions:

1. Level out total compensation over time as initial stock grants reach the end of their vesting schedule. Depending on the vesting schedule, total compensation could begin dropping off as early as Year 3. In order to maintain a certain level of total comp, refreshers are offered.
2. Reward performance as a form of “raise” either for exceptional work or as part of a promotion. While the most obvious way to give someone a raise is to raise their base salary, stock refreshers can also be used to increase compensation. This is often done when an employee is near a base salary cap.

Learn more Learn how Big Tech companies structure their job offers

The Anatomy of a Big Tech Job Offer

Stock refreshers examples

It’s probably easiest to illustrate how stock refreshers work with some examples. Here are a couple of examples that illustrate each of the reasons for stock refreshers listed above (leveling out total comp, and rewarding performance).

Total compensation over time without stock refreshers

Let’s start by looking at a baseline example of a typical Big Tech job offer. Here’s an example taken from a modified version of a real Big Tech job offer from one of my clients. This client was a very experienced software developer with substantial background in embedded systems. This offer is for $210,000 base salary, $400,000 total equity (vesting over four years), and a $100,000 sign-on bonus.

Typical Big Tech offer - no refreshers

Component		Year 1	Year 2	Year 3	Year 4	Year 5	Year 6
Base Salary		$210k	$210k	$210k	$210k	$210k	$210k
Sign-on		$100k
Total Cash		$310k	$210k	$210k	$210k	$210k	$210k
Equity		$100k	$100k	$100k	$100k	$0	$0
Total		$410k	$310k	$310k	$310k	$210k	$210k

Notice what happens in Years 5 and 6. The initial RSU grant completes its vesting schedule in Year 4, leaving a big total compensation gap of $100,000 per year beginning in Year 5.

Stock refreshers to level out total comp

Now let’s look at the same example with stock refreshers used to keep total compensation flat. To keep things simple, let’s say that in Year 4 the employee is given another $400,000 stock refresher with a one-year cliff and four-year vest.

Typical Big Tech offer - comp-leveling refreshers

Component		Year 1	Year 2	Year 3	Year 4	Year 5	Year 6
Base Salary		$210k	$210k	$210k	$210k	$210k	$210k
Sign-on		$100k
Total Cash		$310k	$210k	$210k	$210k	$210k	$210k
Equity		$100k	$100k	$100k	$100k	$100k	$100k
Total		$410k	$310k	$310k	$310k	$310k	$310k

We’re only looking at Year 5 and Year 6, but the compensation numbers would be the same in Year 7 and Year 8 since the stock refresher has a four-year vest.

Stock refreshers to reward performance

Continuing with the same example from above, let’s see what happens when additional stock refreshers are granted as part of a promotion.

To keep things simple, we’ll assume the employee is rewarded only with stock refreshers (no base salary increase). In this case, we’ll say that the employee is promoted effective in Year 6, and they are offered $100,000 total RSUs with no cliff (they begin vesting immediately) and a two-year vest.

Typical Big Tech offer - comp-leveling and performance refreshers

Component		Year 1	Year 2	Year 3	Year 4	Year 5	Year 6
Base Salary		$210k	$210k	$210k	$210k	$210k	$210k
Sign-on		$100k
Total Cash		$310k	$210k	$210k	$210k	$210k	$210k
Equity		$100k	$100k	$100k	$100k	$100k	$150k
Total		$410k	$310k	$310k	$310k	$310k	$360k

And of course in Year 7, they would get the second $50k allotment of their performance-based stock refresher.

This would leave a $50k dip in Year 8, so they would likely get additional refreshers to level their comp.

This continues more or less indefinitely as long as the employee works at the company and continues to perform well. They may also get base salary raises to increase total comp, but we didn’t include those here to keep our examples simple.