🖤 Open Works #036 How To Think About Executive Compensation

Welcome to Open Works. Every edition we solve a ‘people and culture’ problem crowd-sourced from the Open Org Community of 480+ Startup and Scale-up People Leaders.

This edition is sponsored by peoplemetrics.fyi–the benchmarking platform for scale-up people leaders.

Get instant access to verified data from 600+ startups and scale-ups across 18 x people and talent metrics. Gain the insights to make smarter decisions and give stakeholders the context they crave.

📚️ Recent Editions

If you’re new round here, not yet a subscriber or you straight up missed it, here are some of our recent editions.

🔋 Edition 35: How to Manage Change Fatigue - diagnostic, approach and framework for dealing with a real threat.

💻️ Edition 34: Tech Hiring SOS! How To Increase Candidate Quality – practical sourcing tactics and hidden gems.

🤖 Edition 32: Make My Company AI Fluent, Bye – practical ways you can increase your team and organisation’s AI chops.

💭 This Week’s People Problem

🖤 Our Take On How You Solve It

🏃‍♀️ TL;DR:

• Base. Bonus. Equity. These are your three building blocks.

• Match your comp model to your stage, risk appetite, and cash position.

• Design for alignment and retention (the two are not the same).

• Start simple. Don’t over-engineer before you scale.

⚡️ The Problem

Designing exec comp at growth stage is a balancing act.

Too cash-heavy? You burn runway and limit flexibility. Too equity-heavy? You attract risk-hungry folks who may not stay for the grind. Too generous? You’ll hate your past self at Series D. Too stingy? You’ll lose candidates to companies that look more grown-up.

You need to build trust and alignment and keep the cap table as clean as possible. So how do you do that?

Let’s break it down 👇

🧩 The Core Components of Executive Comp

Whether it’s your first VP of Product or your fifth exec hire, most comp plans are made up of three elements:

Base Salary

Provides financial stability and competitiveness.

➡ Example: VP Eng @ Series B might earn $180K–$220K base.

Bonus / Short Term Incentive

Tied to near-term outcomes like revenue or OKRs.

➡ Typical: 25–50% of base (sometimes more at CEO level).

Equity / Long Term Incentive

Aligns execs with long-term value and retention.

➡ Vesting: 4 years w/ 1-year cliff. Instruments: ISOs, RSUs, performance shares.

🔧 Patterns We See by Stage

Comp isn’t one-size-fits-all. It evolves. Here's how most of the companies we’ve worked with do it:

Seed : Series A (Cash-Light / Equity-Heavy)

Profile: Founders + early believers

Base: Light

Bonus: Minimal or none

Equity: Big slices (2–5% for first execs)

 💡 Why? Save cash, reward risk

Series B : C (Balanced)

Profile: Scaling VPs, seasoned operators

Base: Market-competitive

Bonus: 20–40% of base

Equity: 0.2–1%, depending on scope

💡 Why: Balance risk/reward. Attract the “been-there-done-that” crowd.

Series D+ (Cash-Heavy / Equity-Light)

Profile: Exit-prep execs, ex-public company leaders

Base: 75–90th percentile

Bonus: 40–60%+

Equity: RSUs or lower % options, higher $ value

💡 Why: Predictability and reward over upside

🪜 Optional Layers to Add Later

Once you’ve got your base comp structure working, you have available a couple of big strategic levers you can layer in to solve specific problems, especially around performance alignment and long-term retention.

Performance-Based Equity

➡ Great for CRevO/CFO or any highly-leveraged roles where outcomes are clear and measurable.

➡ Typically 10-25% of the total grant is tied to hitting key company milestones (e.g. revenue targets, margin improvements, funding events).

➡ Can be a powerful signal to the board (and to candidates) that you’re serious about value creation.

💡 Just be thoughtful: over-complicating equity splits too early can confuse more than it motivates.

Retention Refreshers

➡ Most equity grants front-load retention value, then drop off after 24 months just when you most need continuity.

➡ Pre-scheduled refreshers (granted in Year 2 or 3) help maintain engagement, especially post-Series C when burn risk from attrition increases.

➡ Think of these as a hedge: they attempt to buy loyalty in the critical “build-to-scale” years without requiring immediate liquidity.

🎯 Design Principles Worth Bearing In Mind For Exec Comp

Stage-Market Fit

Match comp model to company maturity.

Role Specificity

Generalising here, but GTM roles may need more cash; Product/Eng can lean equity.

Geographic Fairness

Don’t forget regional variances.

Dilution Awareness

Model everything.

Liquidity Options

Later-stage? Think secondaries

👀 These principles won’t give you a perfect comp plan (does it exist!?) but they’ll keep you out of the most common traps.

Hope this is useful to you!

📚 Useful Resources

📊 Pave’s Exec Comp Report

📈 Carta H1 2024 Startup Compensation

🛠️ Al Frasers Exec Pay Calculator

📖 OpenComp’s Compensation Guides

🧠 CEO/CFO Pay Study (CAP)

🤓 Want to Get Your Current “People Problem” Featured?

We’re here for the trickiest challenges you’ve got. Hit reply to this email, and let us know what’s keeping you up at night, and we’ll feature next week anonymously!

🖤 Psst! Did You Know We Are Launching An Exclusive Annual Content Membership For People People?!

We certainly are!

👉️ Adam wrote some words about this here. 

TL;DR- it’s all our past/current/future playbooks we’ve written for People People bundled up into an affordable yearly subscription (£120) as well as thousands of pounds of HR tech discounts and some other free stuff.

Early bird discount of 25% off for year 1. If that sounds fun, get your name on the list here 👇️ 

With 🧊 & 🔥 

John & Adam

👉️ Know someone who’d love this newsletter? Forward it their way so they don’t miss out, and make my day whilst you’re at it! 🙂