>- Because of refresh grants and your initial grant running in tandem, years 2-4 can often be your most lucrative. If you don't get promoted or an additional grant you can get significantly less compensation in year 5. Why these companies let people leave because they won't give them additional equity rather than competing for a new hire is beyond me. But they do.

Many large companies operate on an up or out basis. If you're not getting promoted then you're encouraged/expected to leave at some point. This compensation scheme seems like a soft version of that.

Years 1-4 you're being paid both for what you do as well as for your potential. If you haven't been promoted by year 5 then you're just getting paid for what you do.