What to say when you give an employee an equity refresh grant
Most founders get the sizing math right and the conversation wrong. You've done the dilution modeling, picked a grant size, cleared it with the board, and then you walk into the 1:1 and just hand over a number. That's the part that actually determines whether the grant works.
An equity refresh conversation with employees has one job: make the person believe the company is betting on their next four years, not settling a score for their last four. Get that wrong and a $40,000 grant reads as an insult. Get it right and a $15,000 grant reads as a promotion.
Why the delivery matters more than the size
Employees don't have your cap table. They don't know what a normal refresh looks like at your stage, your last round's dilution, or what their peers received. All they have is the number and how you frame it.
That framing gap is why two founders can give the identical grant size and get opposite reactions. One employee walks out re-recruited. Another walks out quietly job-searching because the number felt like a consolation prize for not getting promoted.
The fix isn't a bigger number. It's a specific sequence: context before the number, the number stated plainly, then what it means for their next stretch. Skip the first step and the number lands in a vacuum, where the employee fills in the meaning themselves, usually pessimistically.
The mistake founders default to
The most common failure mode is treating the refresh like a routine HR update: "Hey, comp committee approved a refresh grant for you, it's 5,000 shares, HR will send the paperwork." Technically accurate. Emotionally flat.
The second most common mistake is over-apologizing for the size. Founders who feel weird about equity conversations hedge so hard ("it's not huge, but...") that the employee anchors on the hedge, not the grant. If you sound unsure whether the number is good, they will assume it isn't.
Both mistakes share a root cause: treating the number as the message, instead of treating the number as evidence for the message.
The script
Here's the structure that works, adapted from actual refresh conversations, not a template pulled from an HR vendor site.
Open with the specific reason, not the occasion: "I wanted to talk to you about your equity, separate from the performance review cycle. The reason I'm doing this now is your original grant is fully vested next quarter, and I want your incentives matched to the next three years, not the last four."
State the number without hedging: "The board approved a refresh grant of X shares, vesting over four years with a one-year cliff. At our last valuation that's roughly Y dollars, and it's on top of what you already hold, which is fully vested."
Explain what it's tied to: "This isn't a reward for the past four years, that's what your original grant already paid out. This is us betting on the next four. I want you owning a piece of what we build from here."
Leave room for a real question: "Take a day or two if you want to think it through. If you want to run the numbers with legal or a financial advisor before signing, that's normal and I'd encourage it."
That last line matters more than founders think. Employees who research equity refresh grants independently and find nothing from their own company sent to them proactively tend to assume they got a bad deal. Offering the information first removes the suspicion.
What to do when they push back
Three pushbacks come up repeatedly.
"Is this instead of a raise?" Answer directly: state whether cash comp is also being reviewed separately, and if it isn't, say so plainly rather than letting the ambiguity sit.
"How does this compare to what new hires are getting?" Don't dodge this. If a new senior hire's initial grant is larger than this refresh, that's a real and fair question, and the honest answer is usually about market-rate new-hire grants versus retention-tier refreshes, not that the employee is valued less.
"What's this actually worth?" Give them the share count, the strike price if applicable, and point them to your cap table tool or a 409A-based estimate. Do not give them a dollar figure implying certainty about a future exit. Overpromising here is the single fastest way to turn a retention tool into a resentment source two years later.
The 30-day move
If you're planning refresh grants for the first time, don't script the conversation the week you're delivering it. Draft the three-part structure above, then run it past one other person on your leadership team before the first real conversation, ideally someone who has received a refresh grant themselves and can flag where the framing feels off from the employee's side, not the founder's.
Frequently asked questions
When should I have the equity refresh conversation?
Ideally 60 to 90 days before the employee's original grant fully vests, not after. Waiting until after the cliff has passed means the conversation happens reactively, often triggered by a resignation risk instead of proactive retention.
Should the equity refresh conversation happen in the same meeting as a performance review?
No. Bundling them muddies both. A performance review is backward-looking and evaluative. A refresh conversation is forward-looking and about investment. Separate meetings, even if scheduled the same week.
What if the employee asks for more than the approved grant?
Don't negotiate the number live. Say you'll take the ask back to whoever approves grants and follow up within a set timeframe. Live negotiation on equity, without cap table math in front of you, is how founders end up promising numbers they can't actually support.
Does the manager or the founder deliver this conversation?
For anyone the founder has a direct relationship with, the founder should deliver it. For larger teams, the direct manager can deliver it, but only after the founder has personally briefed them on the reasoning, not just the number.