I'm more familiar with companies that have vesting schedules like: 10% per year for 3 years, then 70% in the final year. That's a great way to keep someone arou

I'm more familiar with companies that have vesting schedules like: 10% per year for 3 years, then 70% in the final year. That's a great way to keep someone around for an extra couple years who doesn't want to be there. I agree with you that your example is a lot more similar to an $n/4 raise. It's kind of like a "resolution" of your pay. Ideally you get paid every day for the work you did that day. $N/4 reduces the resolution to every quarter. My example above reduces the resolution to every 4 years. Each one increases the length of time you're going to keep someone working for you that otherwise wouldn't be. As another reply mentioned, this can be a good thing. Keep around a talented person who you really need. My bet is that more often you're keeping around a talented person who isn't giving >100% (a passionate person will), and is probably poisonous to team morale too.