Misaligned comp plans don’t just cost money. They cost momentum, trust, and talent.

Over the past few years, our firm has touched nearly 50 companies. Many of them navigating rapid growth, complexity, and leadership transitions. And, at least half have needed a serious look at their executive compensation strategy.

Some were overpaying legacy executives with unclear roles.
Some were underpaying their stars. And, losing them.
Others had no bonus plans, or worse - plans that paid out no matter what.

Across the board, we’ve seen one universal truth:
Executive compensation isn’t just about money. It’s about alignment, accountability, and performance.

Why Executive Compensation Matters, Deeply

Executive compensation is a strategic lever. And a cultural signal.

If you get it right:

• Your leaders stay longer, perform better, and think more like owners

• You create a performance-driven culture with clear expectations

• You scale faster and more sustainably

• You build enterprise value, not just annual revenue

If you get it wrong:

• You reward the wrong behaviors and watch margins erode

• You lose your top talent quietly (and quickly)

• You create confusion, resentment, and entitlement

• You destroy trust. Because how you pay speaks louder than what you say

■ PRO TIP: Compensation tells the truth about what your company values. If you don't define it intentionally, your team will define it for you.

Compensation Is Emotional, That’s Why It’s So Often Avoided

Let’s be honest: comp conversations are awkward.

You know someone’s overpaid, but they’ve been with you since day one.
You’re not sure what to pay yourself, so you’ve stayed artificially low.
You want to reward your rockstar COO, but you’re worried about parity across the rest of the team.

This is why so many companies leave comp untouched. It feels easier to avoid than to fix.

But ignoring it doesn’t make it better. It just makes it messier. Until you have a retention issue, a morale problem, or a full-blown leadership crisis.

■ PRO TIP: If you’re uncomfortable talking about comp, your team probably is too. Structure and transparency take the emotion out of the equation.

The Warning Signs of a Misaligned Comp Strategy

• Bonuses are paid regardless of performance

• High performers are underpaid, and they know it

• Everyone’s chasing different KPIs with no shared targets

• Your VP of Sales makes more than your COO. Even in a down year

• You’re stuck in a comp model that made sense at $5M. But not at $50M

This isn't just financial inefficiency. It’s organizational misalignment.

What “Good” Executive Compensation Looks Like

A well-designed comp plan does three things:

1. Drives the right behaviors

2. Reinforces business strategy

3. Scales with the company

Here’s the structure we recommend:

1. Base Salary

Grounded in market benchmarks, but also weighted by:

• Role complexity

• Internal equity

• Strategic importance

• Tenure and leadership maturity

2. Short-Term Incentives (STIs)

Tied to both individual performance and company outcomes:

• EBITDA targets

• Gross margin improvements

• Operational KPIs

• Cross-functional success metrics

Bonuses should be meaningful. But, not guaranteed.

■ PRO TIP: If your bonus plan doesn’t flex with company performance, it’s not an incentive. It’s an entitlement.

3. Long-Term Incentives (LTIs)

Especially useful for succession planning, retention, or exit readiness:

• Phantom equity

• Profit interest units

• Deferred cash bonuses tied to milestone achievement

These plans create “ownership thinking” without giving up real ownership.

■ PRO TIP: Equity isn't the only way to align leaders with outcomes. Structured LTIs can be just as powerful. And, far more flexible.

Real-World Fixes We've Helped Drive

Client A: A $20M company had a “one-size-fits-all” bonus structure.
We introduced tiered targets based on role, department, and impact. Leadership clarity improved, and EBITDA jumped notably in 12 months.

Client B: A COO managing three departments had no variable comp, while peers with smaller scopes earned big bonuses.
We created a tailored plan tied to cost control and execution timelines. The COO stayed, performed, and expanded his team.

Client C: A founder paid themselves less than their VP of Sales.
We adjusted founder comp, restructured sales incentives, and tied bonuses to margin, not just top-line. No more awkward dynamics. Just clarity.

How to Rebuild Your Compensation Strategy

Step 1: Define the “Why”

Is your goal to:

• Improve performance?

• Retain key leaders?

• Prepare for a sale or raise?

• Address equity and fairness?

Your compensation model should match your business objectives. Not just industry averages.

Step 2: Audit Current Structures

We review:

• Base salaries

• Bonus plans

• LTI mechanics

• Discretionary pay practices

• Internal equity

We benchmark against external comps and your own internal hierarchy.

Step 3: Tie Pay to What Matters

We help companies reward:

• Margin improvement

• Working capital gains

• Strategic initiative execution

• Talent development

• Organizational impact

■ PRO TIP: If you’re rewarding effort but not outcomes, don’t be surprised when you get busyness instead of results.

Step 4: Clarify and Communicate

Ambiguity is expensive. We build structures that:

• Are documented

• Align with performance cycles

• Include defined metrics and payout ranges

• Are approved by leadership or board

When to Revisit Your Executive Comp Strategy

If any of these apply, now’s the time to act:

• You’ve grown significantly and haven’t updated comp in 2+ years

• You're preparing for an investor conversation, transaction, or board presentation

• You’re losing top talent. Or, worried you might

• There's tension or confusion about pay among your leadership team

• You’ve made big shifts in strategy, but haven’t updated how you reward it

■ PRO TIP: You don’t need a new comp plan every year. But you do need to reassess it every time your business strategy shifts.

Final Thoughts: Great Comp Plans Pay for Themselves

Here’s the truth we’ve seen play out time and again:

• Smart compensation drives strategy

• Aligned compensation retains top talent

• Clear compensation eliminates confusion

• Evolving compensation supports scale

If you’re trying to grow, evolve, or prepare for the next chapter, your comp plan should reflect that. Because what got you here won’t get you there.

Call to Action

At The William Stanley CFO Group, we help companies design, fix, and future-proof executive compensation structures. If your comp plan hasn’t evolved as your business has scaled, let’s talk. You deserve a structure that rewards the right results. And, retains the right people.