You Get What You Negotiate: The Levers You Need to Know About

When it comes to negotiating executive compensation, the old adage 'if you don’t ask, you don’t get' rings especially true.

Everything is negotiable.

The key to getting the best deal is understanding the levers available and knowing how to pull them. While some components are more universally applicable, others may be more specific to the role, type of company and growth stage they're at.

For instance, a startup might offer equity as a primary incentive, while a more established corporation might emphasize bonuses and retirement benefits.

The key takeaway here is that nearly every aspect of your compensation can be tailored to better suit your needs, goals and expectations. Some levers are easier to negotiate depending on the role and company, but all of them should be considered.

Base

The foundational component of your compensation package.

Salary

Naturally, this is usually the starting point of compensation negotiations. Before negotiating, it's crucial to research industry salary data and understand the market rates for your role, especially in relation to company size, industry and geographic location. Remember that roles often have internal salary bands, meaning there will often be a hard ceiling on base pay. This is where creativity with other compensation levers can make a real difference. You can negotiate higher bonuses, equity options or other benefits to boost your overall cash compensation and ensure the package reflects your value. By combining a competitive salary with other incentives, you can achieve a much more lucrative deal overall.

Salary Review/Adjustment

You can negotiate periodic salary reviews to ensure your compensation stays aligned with company performance and your individual contributions. This is more common in fast-growing companies or startups where compensation can change quickly as the company scales. You might negotiate for a salary review after 12 months, contingent on meeting key performance metrics or based on the company's performance or achieving certain milestones. It's also common to ask for reviews during contract renewals, especially if the company has recently had a positive financial year or hit a major growth target.

Role/Promotion Review

You can negotiate for a role or promotion review within a certain timeframe, often tied to performance or milestones. This allows for a title change or a role enhancement based on your contributions to the company. For example, if you're joining a company as a VP, you might negotiate for a formal review after 12 months to discuss a potential promotion or expanded responsibilities, reflecting the impact you've made.

Bonuses (Short-term Incentives)

Additional financial rewards often tied to annual or short-term performance goals.

Sign-On Bonus

If you're transitioning from a role with equity or bonuses that aren't fully vested, you can negotiate a signing bonus to make up for the lost income. Signing bonuses are typically used to incentivize candidates to join the company and are especially common in industries where talent is in high demand or when companies want to secure top-tier executives quickly. For example, if you're leaving a company where you have significant stock options or performance bonuses, you might negotiate a signing bonus equal to the amount you're forfeiting. This one-time payment can range from a few thousand dollars to six-figure sums depending on the industry and role.

Performance Bonus

A performance bonus is typically tied to specific, measurable goals that are agreed upon at the beginning of the performance period. These goals are often related to individual achievements, company targets or other key performance indicators (KPIs). For example, a performance bonus might be awarded if you hit certain revenue or profit targets. The bonus amount is usually predetermined and based on your ability to meet or exceed those set goals. These can be negotiated.

Discretionary Bonus

These bonuses are not tied to specific metrics but are given at the company’s discretion based on your overall performance or the company’s success. While more common in smaller or newer companies, discretionary bonuses can also be offered in larger organizations, especially if you're playing a significant role in a strategic project. You can negotiate to receive these bonuses in addition to performance-based bonuses, with the understanding that they’re tied to either your individual performance or the overall health of the business. For example, you might negotiate an annual bonus structure that gives you 10% of your base salary, with the potential for more based on exceptional performance.

Retention Bonus

Companies facing major transitions, such as mergers or acquisitions, may offer retention bonuses to ensure that key employees stay with the company during uncertain times. This can be a significant part of your compensation package if you're being recruited during a transition period. For instance, if you're joining a company in the middle of a turnaround or restructuring, you might negotiate a retention bonus that vests over two or three years, paid out in instalments. These bonuses often range from $50,000 to several hundred thousand dollars depending on the size of the company and the level of the role.

Milestone Bonuses

You can negotiate for milestone bonuses that are tied to specific targets or key achievements. These bonuses are typically paid upon the successful completion of major projects or strategic goals. For example, you could negotiate for a bonus if the company hits certain revenue or operational milestones, such as launching a new product or entering a new market. These milestones can be tied to both short- and long-term goals, ensuring that your compensation aligns with the company’s overall success. They are a win-win for both the candidate and company, and can be an excellent way to boost overall cash compensation significantly.

Long-Term Incentive Plans (LTIPs)

LTIPs are compensation mechanisms designed to align your interests with the company's long-term success.

Equity Grants

You can negotiate for equity grants such as stock options or restricted stock units (RSUs), where the number of shares you receive is based on either time or performance goals. For instance, you can negotiate for 50,000 RSUs that vest over five years, aligning your financial success with the company’s long-term growth.

Stock Options

You can negotiate for stock options that allow you to buy company shares at a set price after a specified period or upon meeting specific milestones. Stock options are typically vested over a period of four years, with 25% vesting each year. You can negotiate the number of options granted as well as the vesting schedule, which may be more flexible in certain situations. If the company has recently gone public or is planning to, negotiating for options that allow you to purchase stock at a favorable price can be a significant component of your compensation. For example, you might negotiate for stock options that vest over four years with 25% vesting each year.

Restricted Stock Units (RSUs)

RSUs are a form of compensation that gives you actual shares of the company, which vest over time or based on meeting performance goals. RSUs are particularly common in more established companies. For example, you could negotiate for 10,000 RSUs with a three- or four-year vesting period, allowing you to build wealth as the company’s stock price increases. This is a popular tool used by larger companies that offer a clear path to equity ownership.

Performance Shares

You can negotiate for performance-based equity compensation where the number of shares granted depends on the company achieving certain performance goals, such as revenue or profit targets. For example, you could negotiate for 10,000 shares that vest only if the company achieves a 15% revenue growth over the next three years. These types of plans are often used by publicly traded companies to ensure that the executive's incentives are tied to the company’s overall financial performance.

Phantom Stock

You can negotiate for phantom stock, which mirrors the value of actual company stock but doesn’t involve ownership. Phantom stock can be a tool for companies that want to incentivize executives without diluting actual ownership. This form of compensation can provide significant payouts based on the company’s performance without issuing real shares. For instance, you might negotiate for phantom stock that ties the payout to the company’s valuation or growth in stock price, providing a long-term incentive without requiring the company to issue actual equity. Phantom stock is especially popular in privately held companies.

Performance Units

You can negotiate for performance units, which are similar to performance shares but are often paid out in cash rather than stock. This is a form of incentive pay tied to company performance. For example, you could negotiate for a cash bonus based on achieving certain performance targets like EBITDA or revenue growth. Performance units are harder to negotiate in startups but are common in more established firms with a focus on financial targets.

Stock Appreciation Rights (SARs)

SARs allow you to receive the appreciation in the value of the company’s stock over a set period. You can either receive the increase in stock value in cash or as additional shares. For example, you could negotiate for SARs that pay out the difference between the stock’s value at the time of grant and the value at the time of exercise. This allows you to profit from the company’s growth without the need to purchase the shares upfront.

Co-Investment Opportunities

Some companies offer co-investment opportunities where executives can invest their own money alongside the company’s equity in a specific fund or business initiative. This helps align their personal financial interests with the company’s success. For example, you might negotiate the opportunity to co-invest in a new product or market expansion initiative, with a potential for significant returns if the investment succeeds. These opportunities are more common in private equity or venture capital-backed companies.

Dividend Equivalents

If you're awarded RSUs or other equity-based compensation, you can negotiate for dividend equivalents, which provide you with the equivalent of dividends that would have been paid on those shares. For example, if the company pays dividends, you might negotiate to receive dividend equivalents for any unvested equity, allowing you to benefit from company profits even before your equity vests.

Vesting Acceleration

You can negotiate for accelerated vesting of your equity grants under certain conditions, such as a change of control, termination without cause or hitting specific personal milestones. For instance, you might negotiate for the acceleration of your stock option vesting if the company is acquired, allowing you to fully benefit from your stock options ahead of the normal vesting schedule. This is a valuable tool if you’re joining a company that may undergo significant changes, such as an acquisition.

Profit Share

You can negotiate for a profit-sharing arrangement, where you receive a portion of the company’s profits based on financial performance. This type of incentive is often used by companies to motivate senior executives to work toward increasing company profitability. For example, you could negotiate for a 5% share of the company’s profits each year, providing a direct link between company success and your financial reward. Profit share is common in both large corporations and smaller, private companies with a focus on long-term growth.

Benefits

Non-cash perks that aim to improve your overall well-being and support your work-life balance.

Company Car/Vehicle Allowance

You can negotiate for a company car or a vehicle allowance if your role requires frequent travel or client meetings. This is a common benefit for senior executives and can be structured as an allowance or a full vehicle provision. For instance, you might negotiate for a monthly car allowance of $1,000 or request a luxury car, such as a high-end sedan or SUV, if frequent travel is expected as part of your role.

Relocation Benefits

If you're moving for a new role, relocation benefits can be a key part of your compensation package. These can include coverage for moving expenses, temporary housing or a relocation allowance. It’s important to negotiate these benefits upfront to ensure that the company will support your transition. You can ask for reimbursements for moving services, travel costs or even a lump sum relocation bonus to cover any unforeseen expenses. In some cases, companies may offer additional perks like home search assistance or coverage for family relocation, making it easier for you to settle into your new position. Don’t leave relocation benefits off the table, as they can significantly reduce the financial burden of your move.

Vacation / PTO

Companies typically offer a standard number of days per year, but this can be negotiable, especially for senior roles. If the company offers a limited amount of PTO, you can request additional days off or even negotiate for a more flexible arrangement. In addition to traditional vacation days, you may also want to negotiate for personal days, sick days or the option to take extended leave for family or personal reasons.

Childcare Assistance

If you have children, you can negotiate for childcare assistance, such as a childcare stipend or access to on-site daycare services. This is becoming a more common perk for executives with young families, especially in larger companies or tech firms with flexible benefits. For example, you could negotiate a monthly childcare stipend of $2,000 or access to on-site daycare services, which can significantly reduce the costs of childcare.

Travel Preferences

You can negotiate for travel preferences that make your business travel more comfortable. This could include business-class flights for flights over a certain number of hours (such as over 5 hours), staying in preferred hotel chains, higher daily stipends for meals or other travel expenses, or additional travel perks like access to airport lounges. For instance, you might negotiate for business-class flights on trips longer than 4 hours and guaranteed stays at a high-quality hotel chain, with a daily travel allowance for meals and incidentals. This ensures a more comfortable travel experience while aligning with company budget expectations.

Healthcare & Wellness

You can negotiate for premium health insurance options, such as full family coverage, dental and vision benefits, mental health support, and gym memberships. Wellness perks can also include access to wellness coaches, counseling services or mindfulness programs. For example, you might negotiate for family healthcare coverage with an option for a private health plan or reimbursement for gym memberships.

Professional Memberships

Many companies cover the cost of memberships to industry associations, conferences or other professional organizations that help you stay up-to-date and connected in your field. When negotiating your compensation package, consider asking for coverage of these costs or a stipend for memberships that will directly benefit your role. This could include access to exclusive resources, events or certification programs. Not only does this support your growth, but it also signals the company's commitment to your continued development.

Coaching

Some companies offer coaching as a perk, either as part of their executive development program or to support personal growth. If not, consider asking for access to coaching services or a stipend to cover coaching fees.

Retirement & Savings Plans

You can negotiate enhanced retirement benefits, such as larger employer contributions to your 401(k) or other pension plans. For instance, you could negotiate for a 6% company match instead of the standard 3%, or access to additional investment options for your retirement savings.

Severance

Often overlooked, severance benefits come into play if your employment ends, covering financial support and other provisions through and after departure. These benefits ensure you are protected in case of termination or other company changes and are always worth negotiating.

Golden Parachute

If you're negotiating a high-level role, particularly in a company undergoing significant change, you can negotiate for a golden parachute. This provides a generous severance package in the event of termination, often triggered by a merger or acquisition. For example, you could negotiate for a golden parachute that includes multiple years of salary, a portion of your bonus and the accelerated vesting of stock options. While golden parachutes are more common in larger companies, they can be negotiated in smaller firms, though they may be more difficult to secure.

Severance Benefits

You can negotiate severance benefits that include not just a financial payout but also other support such as continued healthcare coverage, outplacement services or assistance finding a new role. This is especially important if you're taking on a role that comes with a high degree of risk, such as joining a turnaround company or a startup. For example, you could negotiate for severance benefits that cover six months of healthcare or outplacement services if you're laid off.

Length of Severance

You can negotiate for the length of your severance package to ensure it is reasonable and provides adequate support in case of termination. Severance packages are often tied to the number of years you’ve worked for the company or the level of your position. For example, you could negotiate for a severance package that includes 12 months of pay or more, depending on your seniority and the company's policy. In cases of acquisition or restructuring, you might negotiate for even longer severance protection.

Pro-Rata Bonus

You can negotiate for a pro-rata bonus if you’re leaving the company before the end of the performance cycle. This means you’ll receive a portion of your annual bonus based on the time you worked during the year. For instance, if you’re leaving after six months of work, you might negotiate for a pro-rata bonus, which would pay you half of the annual bonus target you would have received had you stayed.

Claw-Back Provisions

You can negotiate the inclusion of claw-back provisions, which allow the company to reclaim compensation in certain circumstances, such as if the bonus or equity grant was paid based on incorrect financial statements or if you're found to have violated company policies. While generally seen as more common in large, publicly traded companies, it's possible to negotiate these clauses to apply under specific conditions or only after significant wrongdoing. For example, you might negotiate that claw-back provisions apply only if you’re found guilty of fraud or other egregious actions.

Additional Incentives & Provisions

Additional contractual benefits and provisions that help safeguard your interests and offer flexibility beyond traditional compensation elements.

Non-Compete and Non-Disclosure Agreements (NDA)

You can negotiate the terms of non-compete and non-disclosure agreements (NDA) to ensure they are reasonable and don't overly restrict your future opportunities. While non-compete clauses are common, they can be negotiated to make them less restrictive in terms of geography or duration. For example, you could negotiate for a non-compete clause that lasts no longer than 12 months or is limited to a specific region, particularly if you're leaving a competitive industry or role.

Ability to Consult and Advise

You can negotiate the ability to consult or advise other companies outside of your role, which is often restricted in your employment contract. This can be particularly valuable if you have industry expertise or valuable relationships. Companies may place restrictions on this to prevent conflicts of interest, but it is often possible to negotiate these terms to your benefit.

Tax Gross-Up

You can negotiate for a tax gross-up, which ensures you aren't penalized by taxes on certain forms of compensation, such as signing bonuses or severance payments. This is especially valuable in the case of large severance payouts or stock options that trigger significant tax liabilities. For example, if you're receiving a large severance package, you might negotiate for a tax gross-up to cover the additional taxes you’ll owe, so the full value of the package remains intact.

Change of Control Protection

This provision ensures you're compensated if the company undergoes significant changes, such as an acquisition or merger. This often includes provisions like accelerated vesting of stock options and severance pay. For example, you might negotiate for accelerated vesting of your stock options and a lump sum severance payment if the company is acquired, allowing you to realize the value of your stock grants even if you’re not with the company long term after the transaction.