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Basically this lets the employer retain more of the upside in stock appreciation - your equity bonus is now recomputed every year at the current stock price, and presumably expressed in dollars (not shares). So they'll say "oh you're getting 50k this year in stock", when you got 40k last year, but meanwhile the share price has doubled and your 40k in equity _would_ be worth 80k if they had given you all 4 years up front.

They say it protects against downside, but odds are if the company isn't doing well they'll cut the dollar value of annual bonuses as well.