How to Structure Executive Compensation
Executive compensation for VP and C-suite roles has three components: base salary (market-competitive for the role and stage), equity (structured as options or RSUs with a 4-year vesting schedule and 1-year cliff), and variable compensation (OTE for revenue roles, bonus for non-revenue roles). The most common mistake is offering below-market base to preserve equity — this loses candidates to better-capitalised competitors and signals poor understanding of the market.
Executive compensation is one of the areas where founders consistently make expensive mistakes — either by underpaying and losing the right candidates, or by overpaying relative to stage and creating unhealthy precedent. Understanding the components, the benchmarks, and the negotiation levers allows you to build a compelling offer that closes the right candidate.
Compensation Components
| Component | Description | Typical Range (Series B) |
|---|---|---|
| Base salary | Fixed annual cash | $200K–$380K depending on role |
| Target bonus | Performance-linked cash (non-revenue roles) | 10–20% of base |
| OTE variable | Commission/variable (revenue roles) | $50K–$150K above base |
| Equity | Options or RSUs, typically 4-year vest, 1-year cliff | 0.1%–1.5% depending on role and stage |
| Signing bonus | One-time cash to bridge notice period or unvested equity | $25K–$100K when relevant |
Equity by Role and Stage
| Role | Seed | Series A | Series B | Series C |
|---|---|---|---|---|
| VP Sales | 0.5–1.0% | 0.3–0.6% | 0.15–0.35% | 0.05–0.15% |
| VP Engineering | 0.5–1.5% | 0.4–0.8% | 0.2–0.5% | 0.1–0.2% |
| CTO | 1.0–3.0% | 0.5–1.5% | 0.3–0.8% | 0.1–0.3% |
| CFO | 0.3–0.8% | 0.25–0.5% | 0.15–0.35% | 0.05–0.15% |
| CMO | 0.4–0.8% | 0.25–0.5% | 0.1–0.25% | 0.05–0.1% |
The Most Common Mistakes
| Mistake | Consequence |
|---|---|
| Offering below-market base to preserve equity | Loses candidates to better-funded competitors; signals naivety |
| Not benchmarking against current funding stage | Offer is right for Series A but wrong for Series B context |
| No clear equity communication | Candidate cannot evaluate the offer — reduces close rate |
| Signing bonus as standard practice without purpose | Sets precedent; reduces budget for more impactful uses |
How to Communicate Equity Value
When presenting equity, give the candidate: (1) the option grant count, (2) the total shares outstanding, (3) the current preferred price (409A), and (4) an honest scenario table showing value at 2x, 5x, and 10x outcomes. Candidates who cannot evaluate the equity offer cannot make an informed decision — and your best candidates will not join without that information.Frequently Asked Questions
What is a typical VP Sales OTE at Series B?
A Series B VP Sales typically earns $220K–$280K base with $100K–$150K variable (OTE $320K–$430K). Geography significantly impacts these figures — San Francisco and New York tend to be 15–25% higher.
Should I offer a signing bonus?
Offer a signing bonus when the candidate has unvested equity at their current employer that they would forfeit by leaving, or when there is a meaningful gap between your offer and their current compensation. Do not offer signing bonuses as a routine practice — they set an unhealthy precedent.
How do I know if my equity offer is competitive?
Use compensation benchmarking data from Carta, Levels.fyi (for engineering roles), or executive compensation reports. Also ask your investors — most VCs have compensation benchmark data they share with portfolio companies.
Facing This Decision Now?
A 20-minute confidential search assessment with Manas Majhi covers your specific situation — not a sales call.
Request a Search Assessment →