Getting Started with Executive Compensation

Compensation 101
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January 7, 2025
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4
min read
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Companies spend a lot of money on executive compensation, so it’s critical they get it right. In fact, among companies in Pave’s dataset, on average, 21% of company personnel spend is spent on executive base salary. 

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That said, identifying the right combination of base salary, bonuses, and equity isn’t easy. At public companies, where executive compensation is beholden to additional rules, regulations, and oversight, the process is even more complex.

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Here, we’re sharing an overview of the executive compensation to help you get started in understanding the topic and benchmarking for these roles at private companies.

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What is a typical executive compensation package?

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Executive compensation encompasses how organizations reward their C-suite and senior leaders. Employees with titles like Chief Executive Officer, Chief Financial Officer, Vice President of Sales, and President are typically considered part of the executive team (here's a list of more executive titles).

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Executive compensation packages vary from company to company, but they usually include the following elements.

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  • Base salary: The fixed cash component and guaranteed dollar amount an executive will make annually. 

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  • Variable pay: Most executives receive some bonus or commissions contingent on hitting specific business goals, like annual revenue growth rate.

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  • Equity: Executives are typically granted shares in the company. These are often (but not always) vested over four years, giving leaders a stake in the organization’s long-term growth. 

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  • Benefits: Executive compensation goes beyond monetary pay. It also includes holistic benefits like health insurance, vacation time, spending stipends, and more.

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Compensation is typically determined based on factors like title, industry, and company type. Pave data shows while some organizations pay executives differently based on their location tier, the pay differential is less significant than it is for individual contributors and managers. This demonstrates that the search for an executive is highly dependent on the role and the candidate themselves, so location is less of a factor when determining executive pay. 

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What is the goal of executive compensation?

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For organizations, designing a carefully curated executive compensation package helps you stand out from the competition and, as a result, attract and retain top-tier leaders. According to AESC, the primary reason executive-level candidates accept a new job is for better compensation.

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A well-thought-out executive compensation plan also helps keep the leadership team motivated and inspired to work towards company goals. For example, many organizations offer executives bonuses for hitting specific targets, such as achieving growth in an emerging region or product segment.

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Equity is a key component of executive compensation, encouraging executives to continue driving value over time. After their vesting period is complete, many executives receive refresh grants—our data shows that 49.1% of Founder CEOs at private companies have received a refresh grant.

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Pave CEO and Founder, Matt Schulman shared his thoughts on executive refresh grants. See what the LinkedIn community had to say!

How do you determine executive compensation?

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While determining executive compensation is both an art and a science, it always starts with accurate data. One easy way to get started is with Pave’s free Market Data, which you can use to benchmark compensation for executives.

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Here’s how to get started in three simple steps.

1. Create a Free Pave Benchmarking Account 

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Sign up for a free Pave account. 

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After creating an account, you’ll be able to access reliable and accurate benchmark data collected from over 8,500 companies and 28,000 executive data points. 

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Pave’s integration-based approach means the database of executive records is constantly growing. As Pave’s data is updated in real time, you can feel confident that you’re always using the most up-to-date data. 

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Once you’re logged in, click on “Explore market data” and then navigate to the “Executive Compensation Tab.”

2. Select The Relevant Filters

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Using the available filters helps you to narrow your search. Pave allows you to refine your search using the following categories:

  • Title
  • Location
  • Currency
  • Founder vs. non-founder
  • Private vs. public
  • Industry 
  • Company stage
  • Target percentile 

Choose the option from each dropdown menu that best describes your business.

3. Review Your Results

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Based on what you selected, Pave will generate a compensation benchmark report. The report shows base pay, target variable pay, total cash, and total equity by percentile. 

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You can share a link to the report or download the results to discuss with other internal stakeholders.

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With accurate and up-to-date data, you can make more informed compensation decisions.

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Want access to executive compensation data?

Pave provides executive salary and equity benchmarks from over 8,500 companies for free.

Learn more about Pave’s end-to-end compensation platform
Jess Cody
Contributing Writer
Jess is a content strategist and writer with a passion for helping small and mid-sized B2B companies tell great stories. Outside of work, Jess is an east-coaster turned west-coaster, a yoga teacher, and a fan of bad reality TV and good food.

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