A sign-on bonus is a one-time cash payment made to a new executive upon accepting an offer, typically within the first 30–60 days of employment. It is most commonly used to offset unvested equity or deferred compensation the candidate leaves behind at their current employer, or to bridge a first-year compensation gap when the new company cannot match the candidate's current total compensation in cash alone.
When Sign-On Bonuses Are Used
Sign-on bonuses solve a specific financial problem in executive hiring: the candidate has unvested equity or deferred compensation at their current employer that they forfeit by leaving before it vests. Without a sign-on bonus, the candidate's rational choice is to stay until their equity vests — which can be 6–18 months away.
A well-structured sign-on bonus is not a bribe. It is a mechanism for equalising the financial position of the candidate, making a move economically rational for them without requiring the hiring company to permanently inflate the base salary or equity grant.
Sign-On Bonus Norms — VP and C-Suite Hires
How Sign-On Bonuses Are Structured
Sign-on bonuses for VP and C-suite hires typically range from $20K–$200K depending on the amount of forfeited unvested equity. The most defensible structure ties the sign-on amount directly to the value of unvested equity the candidate is leaving behind, which requires the candidate to disclose their current vesting schedule and strike price.
Most sign-on bonuses include a clawback provision: if the executive leaves within 12–24 months (voluntarily or for cause), a prorated portion of the bonus is returned. This protects the company from paying a sign-on to a candidate who quickly exits.
“The worst way to handle unvested equity is to ignore it. The second worst is to offer a sign-on that has no logical connection to the amount forfeited. The best approach: ask the candidate what they're leaving behind, calculate the value, and structure the sign-on accordingly.”
Sign-On Bonuses in Executive Offer Construction
When structuring an executive offer, a sign-on bonus is most effective when it is explicitly linked to the unvested equity problem — not offered as a generic sweetener. Candidates respond better when the bonus is framed as a solution ('We want to make sure you aren't financially penalised for leaving your equity on the table') rather than a line item.
Majhi Group includes sign-on bonus analysis in every offer construction process. The goal is to close the candidate at the right total cost, not to overpay across the full compensation package.