Carta’s equity refresh program

Tenure grants

The equity grant structure we all use today was created when the average time to exit for a company was 4–5 years. That is why most vesting schedules are 4 years. Today the average time to exit is over ten years, but we’re still using standard four year vesting schedules. Tenure grants serve to retain employees beyond the initial four year vesting period.

Performance grants

For our performance grants we utilize the traditional four year vesting schedule because we want the impact to begin immediately. These are layered on top of the initial equity grant and subsequent boxcar grants.

Role change grants

Role changes grants are perhaps the most difficult for companies to navigate. If the company has grown in value, so has the value of the employee’s initial equity grant. Depending on the scale of that growth, an employee may already be vesting more equity value than a new hire would receive. Most equity programs wouldn’t issue additional equity to the employee in this situation, which makes sense from the company’s perspective but not from the employee’s.

Inversion grants

Every year we adjust our compensation rates to reflect market rates. And every year we do a check for each one of our employees to make sure that they wouldn’t make more as a new hire than they do now. If we find a discrepancy, we fix it with what we call an inversion grant.

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