Explore Equity Practices

Equity Practices provides benchmarks for how companies design their equity programs. While equity compensation benchmarks in Market Data show you how much equity companies grant, Equity Practices shows you how those programs are structured: burn rates, vesting schedules, vesting durations, and cliff periods.

All Equity Practices data is updated monthly. For vesting benchmarks, only grants that started vesting in the previous 12 months are included. For each metric, Pave identifies the most common practice at each company and counts that as the company's practice. For example, if a company issued 100 four-year grants and 60 three-year grants in the past 12 months, that company is counted as practicing four-year vesting.

You can access Equity Practices from the Market Data landing page by selecting Equity Practices under Market Practices.

Equity burn rates

Equity burn rate measures how much of a company's equity is being distributed through compensation in a given year. Pave provides two burn rate benchmarks:

• Gross equity burn rate: The total shares granted over a 12-month period, divided by fully diluted shares. For private companies, the denominator is the most recent fully diluted shares value within the 12-month period. For public companies, the denominator is the weighted average outstanding shares over the 12-month period.
• Net equity burn rate: The total shares granted, minus canceled, expired, and forfeited shares, divided by fully diluted shares.

Burn rate benchmarks are displayed as percentile distributions across predefined ranges (less than 1%, 1-2%, 2-3%, up to greater than 10%). To reduce noise, burn rate buckets beyond the 10th and 90th percentiles are removed from the histogram, and extreme outliers are excluded from results.

Results include the most recent full year of equity data per company. Companies with burn data older than one year are excluded.

Burn rate distribution

Equity burn distribution breaks down burn rates by employee type (executive versus employee) and grant type (new hire versus ongoing). Distribution rates are calculated the same way as overall burn rates: shares granted over a 12-month period divided by fully diluted shares, split by category. Burn rate distribution excludes non-employee grants (board members, consultants, and similar).

Grant recipients

By default, burn rate benchmarks include grants to employees and executives only. The "All Grant Recipients" filter expands results to include non-employee grants such as those to board members and consultants.

Vesting benchmarks

Equity Practices provides benchmarks for four aspects of vesting program design. Each one shows the distribution of practices across companies in the benchmark population.

Vesting duration

The total length of time over which equity grants vest. Benchmarks show how long grants typically take to fully vest across companies.

Cliff duration

The length of time before any equity in a grant begins to vest. Benchmarks show how companies structure the initial waiting period before vesting starts.

Vesting structure

The pattern of how equity vests over the grant period:

• Linear: Equity vests evenly over the vesting period
• Accelerated: More equity vests earlier in the grant period
• Back-weighted: More equity vests later in the grant period
• Single event: All equity vests at once

Vesting interval

The frequency at which equity vests after the cliff has been reached. The possible intervals are:

• Monthly
• Quarterly
• Annually
• One time (single vest event)

Access

Equity Practices is available to Market Data Pro customers.

For definitions of equity terms used in this article, see the Common definitions section in Equity data benchmarking.