In executive search, especially at the ELT level, compensation conversations have become increasingly distorted by “paper math”, the seductive but often misleading comparison of short-term numbers across competing offers. Base salary, first-year bonus, and headline equity percentages tend to dominate decision-making. But these inputs rarely tell the whole story. In fact, they often obscure it.
What ultimately matters is the actual long-term value of the incentives, not how they look in a spreadsheet on day one.
The Misleading Simplicity of Paper Math
Candidates frequently evaluate equity as if all percentages are created equal:
- Is it 1% or 5%?
- What’s the strike price?
- What’s the vesting period?
But the quality of the equity matters far more than the quantity.
A 1% ownership stake in a company with committed capital, no burn, no reliance on future fundraising, tax treatment, and a stable capital structure can be meaningfully more valuable than 5–7% in an entity that will inevitably dilute, continuously raise capital, or face structural constraints.
Mechanically, organizations can make paper math look attractive: adjust strike prices, shorten vesting schedules, or inflate early percentages. But those changes don’t alter the fundamental economic engine that determines whether the equity ever becomes real money.
Short-Term Gains vs. Durable Value
There’s a growing tendency among candidates to optimize for what pays out quickly: the largest base, the fastest vesting schedule, the lowest strike price. But true wealth creation for executives has never come from short-term outcomes. It comes from long-term alignment with a business that can actually compound.
When a company:
- Has real, committed capital
- Controls a focused portfolio rather than dozens of bets
- Doesn’t need to raise additional rounds or take dilution risk
- Has clear governance and full operating control
then the equity is inherently worth more because the path to value realization is clearer, less risky, and less dependent on external forces.
The Apples-to-Oranges Problem
Comparing equity packages without considering capital structure is like comparing salaries without considering cost of living.
It assumes all numbers are equivalent, when in reality the denominator (the business’s actual economics) matters far more than the numerator.
Too many candidates unknowingly compare apples to watermelons:
- A non-founder receiving 5–7% of a young company with heavy burn and future dilution risk may end up realizing far less than they would with a smaller stake in a durable, well-capitalized business.
- A low or zero strike price may sound attractive, but the tax treatment, exit conditions, and capital requirements can dramatically alter the outcome.
- Short-term vesting looks exciting, but if value creation will take years, accelerated vesting doesn’t change the underlying economics.
In Leadership Roles, the Right Question Isn’t “How Much Equity?” – It’s “Equity in What?”
Senior leaders don’t win by negotiating the flashiest year-one package. They win by choosing the platform where their contribution can genuinely create enterprise value and where the capital structure allows them to participate meaningfully in that value.
A sophisticated compensation decision requires zooming out:
- Is the promise of value real or theoretical?
- Is equity structured for long-term wealth creation or short-term optics?
- Does the business model support exponential return, or is the upside capped by future capital needs?
The irony is that the offers that look smaller on paper often produce much larger outcomes in reality—because the math behind them is grounded, durable, and achievable.
The Bottom Line
The senior executives who consistently make the best long-term compensation decisions share one behavior: they prioritize true economic value over headline numbers. They look past paper math and focus instead on structure, stability, capital, control, and the long-term alignment between effort and reward.
For candidates evaluating multiple offers: Don’t choose the role that looks best in year one. Choose the one that will still look smart in year ten.
A Final Word for CEOs and Boards
When you’re navigating senior-level negotiations, ask yourself one simple question: Are our priorities actually aligned?
If a candidate is optimizing for short-term gains instead of long-term value creation, that’s not a compensation conversation. It is a signal. Leaders who fixate on immediate payout often struggle to build durable businesses, drive compounding outcomes, or stay the course when the real work begins.
The best executives lean into the long game. If someone can’t see past the next vesting milestone, you may have found your answer before the offer is even signed.
