Equity And Bonus Structures For C-Suite Talent: What The Data Shows And How To Plan: How do companies structure bonus and equity plans for executives?

The equity landscape

Erevena recently released a compensation report with Ravio and one of the key themes that came through was that equity has become a core pillar of compensation.

When asking one of Erevena’s partners, Kevin Elderfield his thoughts on the current equity landscape he provided his commentary: “Equity is an expected part of the compensation package for the CEO, Board and C-suite work we do, particularly in private equity. What’s shifted is where the strongest candidates focus their attention in those conversations. It’s no longer simply about the headline percentage; it’s about understanding what sits behind it and how realistic the potential value is.

Candidates are doing much more due diligence on the assumptions, hurdles and value creation plan that underpin an equity offer, particularly given the greater uncertainty in the software exit market. A credible, transparent equity story will often be more compelling than a higher headline percentage based on assumptions candidates don’t believe are achievable.

Firms can risk negotiating themselves out of competitive processes if the projections feel overly optimistic or there isn’t enough transparency around how the equity works in practice. At CEO level, that matters even more: the company’s value creation plan is effectively the CEO’s personal scorecard, so the assumptions underpinning the equity have to feel credible.”

That scrutiny doesn’t stop at the headline number – it extends to the vehicle behind it. Our recent compensation survey of UK and European tech companies shows why.

75% of executives now receive equity

Equity has become a core pillar of compensation, not a nice-to-have. Three-quarters of executives now receive it as part of their package. But the more interesting finding isn’t the prevalence, it’s the design, and it shifts sharply with company stage.

The data from our recent compensation report suggests:

Early-stage companies lean heavily on tax-advantaged stock options (41%) – the most accessible, tax-efficient way to offer meaningful upside when cash is constrained. RSUs are rare at this stage (3%), typically only appearing in subsidiaries of US parent companies or post-acquisition scenarios.

Late-stage companies favour non-tax-advantaged options (43%), with RSUs also rising sharply (24%). This reflects stronger cash positions and a shorter runway to liquidity – executives at this stage want value that feels real and near-term, not a long-dated bet.

Across all levels, stock options remain the most common vehicle overall at 44% (28% tax-advantaged, 16% not), followed by RSUs at 31%.

This has a direct implication for companies competing for the same candidate at different stages: a grant that looks generous on paper can feel far less compelling if the vehicle doesn’t match what the executive needs at that point in their career.

A CFO weighing a Series B offer against a late-stage one isn’t just comparing numbers on a term sheet – they’re comparing how real that upside feels. The takeaway: don’t just benchmark grant size, benchmark the vehicle. The right structure, matched to stage, often does more to close a candidate than a marginally bigger number.

26% of PE-backed companies use growth/hurdle shares for Executives

Only 26% of PE-backed companies use growth or hurdle shares for executives, suggesting these structures are still far from standard practice. Where used, they can give executives meaningful participation in future value creation while aligning rewards with returns above an agreed hurdle.

Kevin Elderfield also commented that, “Co-investment is also increasingly relevant at CEO and Board level, with executives in some PE-backed businesses putting meaningful personal capital at risk alongside the sponsor. This is worth recognising when assessing the overall equity proposition, as it can materially change how a candidate evaluates the attractiveness and risk of the package.”

What this means for HR and Reward teams

Focus on the underlying economics of the equity proposition. HR and Reward teams should be clear on what an equity percentage could realistically be worth, the assumptions and hurdles behind that value, the likely exit scenario, and – particularly in PE – the extent to which management and investors have meaningful capital at risk. A credible 1% can be far more compelling to a candidate than a theoretical 2% if the value depends on assumptions they don’t believe.

Build stage-appropriate benchmarking into your comp framework. A single “market rate” for equity across all stages isn’t meaningful. Benchmark against companies at a similar stage, not just similar size, sector, or geography.

Anticipate friction when hiring across stages. Poaching talent from an earlier- or later-stage competitor (or vice versa) means candidates will likely need extra education on what they’re actually being offered. Manage this at the offer stage as it’s a retention risk, not just an acquisition one.

Review vesting and liquidity assumptions regularly. As tax-advantaged option limits, HMRC/EMI thresholds, or valuations shift, a package that was competitive 18 months ago may no longer be. Build this into your reward cycle, not just base salary reviews.

Don’t assume one equity philosophy fits the whole leadership team. A CFO closer to a liquidity event may value RSUs or cash-equivalent value far more than a newly hired CTO focused on long-term upside. Consider personalising vehicle mix within a consistent framework. 

Use vehicle mix as a retention lever, not just an attraction one. Refresh grants, re-vesting schedules, or a shift in vehicle type at renewal points can be as effective for retaining existing talent as for winning new hires – particularly at the late-stage/pre-liquidity point, where flight risk tends to spike.

69% of executives receive a bonus

Bonuses are near-universal at senior levels, and more common at C-level than VP.

Prevalence varies sharply by function. Sales has by far the highest bonus prevalence. 100% of salespeople at both C-level and VP level get bonuses. This is typically a 100% or commission-based bonus, so structured slightly differently from other functions in any case.

Within each function, VP and C-level roles receive very similar bonus amounts – whereas base salary increases significantly with level, bonus proportion doesn’t.

Bonus as % of base salary:

 

• People: 34% VP → 33% C-level
• Marketing: 37% VP → 40% C-level
• Engineering: 24 VP % → 30% C-level
• Sales: 100% VP → 100% C-level

However, we did find that the design of the bonus structure does change, with 40% of VP bonuses tied to individual targets and 20% company targets, compared to 55% of C-level bonuses tied to company targets and just 8% individual.  Finance is the exception, where bonus weighting doubles from VP to C-level (25% to 50%).

Key takeaways for companies building out their equity and bonus packages

• Do the due diligence on the underlying economics. Assess what the equity percentage could realistically be worth, the assumptions and hurdles underpinning that value, the likely exit scenario, and particularly in PE how much of the investor’s own capital is at risk. A credible 1% can be far more compelling than a theoretical 2% if the latter depends on assumptions the candidate doesn’t believe.
• Match structure to stage and to the individual. Our data suggests early-stage firms should lean on tax-advantaged options; later-stage firms should shift toward RSUs and non-tax-advantaged options. Within a leadership team, personalising vehicle mix can improve both attraction and retention.
• Cross-stage hiring carries hidden retention risk. Expect friction when moving candidates between company stages, and manage it at the offer table, not after.
• Seniority changes the structure of bonus, more than the size of the opportunity. As executives progress from VP to C-level, bonus targets increasingly shift from individual to company performance, while the overall target percentage remains broadly flat. Sales is the clear outlier, with bonus potential at around 100% of base across levels. In practice, the CEO’s target is already tied to the company value creation plan, so there is limited distinction between personal and company performance in determining bonus achievement.

To receive full insights from the report, you can download here.