Refresh Grants, Cliffs, and Front-Loaded Vesting: Reading the Fine Print of Your Equity Schedule

Two offers with the same total grant can deliver very different amounts of stock in year one. The vesting schedule, not the headline number, determines what you actually receive.

Equity compensation at Bay Area companies used to follow a nearly universal template: four years of vesting with a one-year cliff, then monthly or quarterly installments. That template still describes most startup grants, but public companies and late-stage private companies have introduced a wide range of variations. Understanding your own schedule, and how refresh grants layer on top of it, is essential to comparing offers and to planning around the tax events each vesting date creates.

The standard schedule and the cliff

Carta's vesting overview describes the four-year schedule with a one-year cliff as the market standard for early employees. The cliff means that nothing vests until the first anniversary, at which point 25% vests at once, followed by the remainder in even installments. If you leave at eleven months, you receive nothing. The cliff protects the company from short tenures, and it is the main reason departure timing often clusters just after the one-year mark.

Front-loaded and back-loaded schedules

In recent years several large employers have moved away from even vesting. According to a Levels.fyi survey of vesting schedules, Amazon has long used a back-loaded 5/15/40/40 schedule, delivering only 5% of the grant after the first year and 40% in each of years three and four, with sign-on bonuses in the first two years to fill the gap. Google has moved in the other direction, to a front-loaded 38/32/20/10 schedule, and DoorDash uses 40/30/20/10. Some companies have shortened the total period; the same survey notes Pinterest on a three-year 50/33/17 schedule and Stripe on one-year grants.

A front-loaded schedule delivers more value early and reduces the retention penalty for leaving after two years. A back-loaded schedule does the reverse, and an employee who departs Amazon after two years has vested only 20% of the initial grant. When comparing offers, the useful exercise is to map out the dollar value expected to vest in each year, using a constant stock price, rather than comparing four-year totals.

Refresh grants

A refresh, or refresher, is an additional grant made after you join, typically at annual review or promotion. Refreshers matter because the initial grant fully vests after four years and, without new grants, equity compensation would drop to zero in year five. Companies that use front-loaded initial grants often rely on refreshers to sustain compensation, and the Levels.fyi survey notes that companies issue refreshers in later years to reward high performers.

Refreshers usually carry their own four-year schedule, so at any given time you may have several overlapping grants. The result is that equity compensation for a tenured employee is a stack of tranches, each vesting on its own timetable. Because refresh grants are discretionary and often tied to performance ratings, the total is less predictable than salary, and it can fall sharply if a company tightens its budget or if layoffs reduce headcount and refresh pools.

Tax consequences of each vesting date

For RSUs, every vesting date is a taxable event. The value of the shares delivered is ordinary income, with federal supplemental withholding at 22%, or 37% above $1 million in supplemental wages, under IRS Publication 15, and California withholding at the 10.23% supplemental rate. For a household in the top federal bracket, which for 2026 begins at $768,700 of taxable income for joint filers per the IRS inflation adjustments, that withholding is well short of the actual liability. A front-loaded schedule concentrates income and the withholding shortfall in the early years; a back-loaded schedule pushes both later. Either way, quarterly estimated payments may be needed to avoid underpayment penalties.

Reading your own documents

The grant notice states the number of units or options and the vesting start date. The plan document and award agreement describe what happens on termination, leave of absence, disability, and change of control, and whether the company can withhold shares to cover taxes. Some agreements include provisions that pause vesting during unpaid leave or that accelerate vesting on a change of control. Keeping a simple spreadsheet of each grant, its schedule, and its next vesting date makes it possible to anticipate income and to decide in advance whether to sell shares as they vest.

This article is educational only and does not constitute investment, tax, or legal advice. Please consult a qualified professional about your own equity awards.

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Important Disclosures: Propulsion Capital Management is an investment adviser registered with the State of California Department of Financial Protection and Innovation. Registration does not imply a certain level of skill or training. This article is provided for general informational and educational purposes only and does not constitute investment, tax, legal, or accounting advice, nor an offer or solicitation to buy or sell any security or to adopt any particular investment strategy. The information is believed to be accurate as of the date of publication but is subject to change without notice; tax laws and regulations change frequently and their application depends on individual facts and circumstances. Nothing herein should be relied upon as a substitute for personalized advice from a qualified professional. Investing involves risk, including the possible loss of principal, and past performance is no guarantee of future results. Diversification does not ensure a profit or protect against loss. Any examples are hypothetical, are for illustrative purposes only, and do not reflect the experience of any client. Links to third-party websites are provided for convenience; Propulsion Capital Management does not endorse, and is not responsible for, the content of third-party sites. Propulsion Capital Management does not provide tax or legal advice; please consult your tax adviser or attorney regarding your specific situation.