What it is:
An annual equity grant, sometimes called a refresh grant, is a new LTIP award issued on a recurring basis, typically once a year. Each new grant runs on its own independent vesting schedule, measured from its own Grant Date, rather than extending, replacing, or resetting the schedule of a prior grant.
Why does it matter:
Most executives don't receive one LTIP grant at hire and nothing afterward. Refresh grants are issued alongside prior grants, not instead of them. The term refresh grant/refresh award stems from the idea that as your older grants fully vest (in particular a new hire or sign-on award), the newly granted LTIP award refreshes the amount of unvested LTIP, which continues to act as a retention tool. Understanding refresh grants also explains something worth planning around: once several grants are layered, the full benefit of vesting is revealed year over year, as covered in full in How Vesting Is Designed as a Retention Instrument. The addition of annual grants/refresh grants provides an ongoing incentive to remain with the company.
What do people most often get wrong:
Some people assume a new grant simply enlarges an existing one, or restarts the same vesting clock. Each refresh grant is a separate, independent award with its own vesting schedule and its own grant date. It's this layering, one grant stacking on the last, that produces a standing, self-renewing amount of unvested LTIP once an annual grant cadence is established, rather than a single balance that eventually resolves to zero.