Executive pay is often misunderstood because so much of its value sits outside base salary. Here is how senior compensation is typically structured — without the numbers, which depend entirely on the specific role.
The three building blocks
Most senior packages combine three elements. Base salary provides stable, guaranteed pay. An annual bonus rewards delivery against yearly performance targets. And long-term incentives — most often equity or long-term incentive plans — reward sustained value creation over several years. The balance between them says a great deal about what a business is asking a leader to prioritise.
Why long-term incentives matter most
For senior leaders, and especially at founder-led and private-equity-backed businesses, the long-term incentive is frequently the largest part of the opportunity. It ties the leader's reward to the value they are hired to create — often realised at a future exit or liquidity event — and aligns their interests with the owners'. It also carries risk and a time horizon, which strong candidates weigh carefully.
What each element is designed to do
A well-designed package is deliberate: base for stability, bonus for annual execution, long-term incentive for enduring value and retention. When the structure is misaligned — too much guaranteed pay, or incentives disconnected from what actually drives value — it rewards the wrong behaviour. The structure is a strategy, not an afterthought.
Why structure beats headline numbers
Comparing roles on base salary alone is misleading, because so much senior value sits in bonus and equity. The right benchmark for any specific role depends on its seniority, the ownership structure, the stage of the business, and the scope of the mandate — which is why we share role-specific benchmarks confidentially as part of a search.
Structuring a leadership package?
We share role-specific compensation benchmarks and structuring guidance as part of every search.
Explore Executive Search →Frequently asked questions
What are the main parts of executive compensation?
Base salary, an annual performance bonus, and long-term incentives such as equity. For senior leaders the long-term element is often the most significant part of the opportunity.
Why is equity so important in executive pay?
Because it ties a leader's reward to the sustained value they are hired to create, aligns them with the owners, and — especially at founder-led and PE-backed businesses — is often the largest component.
Related: Beauty Executive Compensation · What Is an Equity or LTI Package? · How to Hire a Beauty CEO
