How to read and evaluate your executive comp package

If you’ve been offered a Director, VP, or SVP role, chances are your compensation package includes more than just a salary. Bonuses, stock options, deferred compensation, and expanded benefits are often part of the deal. But most people don’t actually know what they’re looking at.

This guide walks through what to expect in an executive comp package, what the terms mean, how mindset affects your decisions, and a few practical strategies to help you make informed choices.

Section 1: Understand what’s in the package

Here’s what commonly shows up in an executive compensation package, and what it all means.

Base salary

Your regular paycheck. It’s often a smaller portion of your total comp at the executive level, especially once equity and bonuses kick in.

Bonuses

• Annual bonus: Based on performance metrics, often paid out in Q1 of the following year
• Signing bonus: One-time incentive to join or accept promotion
• Retention bonus: Paid for staying a certain number of years

Check the terms: when they’re paid, if they’re guaranteed, and what causes you to forfeit them.

Equity compensation

You may see any of the following:

• RSUs (Restricted Stock Units): Shares granted over time, taxed when they vest
• ISOs (Incentive Stock Options): Can be tax-advantaged but may trigger AMT
• NSOs (Non-Qualified Stock Options): Taxed at exercise, not favorable like ISOs
• Performance shares: Only vest if targets are met

Equity is complex. Vesting schedules, expiration dates, and tax treatment all matter.

Deferred compensation

You agree to delay part of your pay (usually bonuses) until a future date.
Key things to know:

• It’s often irrevocable once elected
• Payout timing is set at the start
• It reduces current taxes but increases future ones
• Subject to 409A rules and cannot be accessed early without penalty

Executive benefits

• Supplemental disability or life insurance
• Long-term care insurance
• Legal and financial planning support
• Non-qualified retirement plans

Not all of these are worth it. Evaluate coverage amounts, portability, and cost.

Section 2: Mindset, behavior, and psychology

Many execs feel pressure to “maximize” their package. But more isn’t always better if you don’t understand how it works.

Common behavior patterns:

• Avoidance: Ignoring parts of your package that feel confusing
• Overconfidence: Assuming you’ll “figure it out later”
• Scarcity mindset: Taking more equity or deferred comp than fits your life
• Status bias: Valuing complexity over clarity

Shift your mindset:

• “I don’t know what this means” → “I need to ask better questions”
• “This looks like a great offer” → “Does this actually serve my goals?”
• “I’ll decide later” → “Clarity now avoids regret later”

You don’t have to be an expert. But you do need to be an active participant.

Section 3: Tactical tips to evaluate and plan

Once you understand the pieces and recognize your behavioral patterns, here are a few strategies to put in place:

• Review vesting timelines: Know when your equity becomes yours and when it expires
• Map out income timing: If you defer compensation or bonuses, understand when they’ll pay out and how they’ll be taxed
• Run tax projections: Model whether you’ll hit AMT or Net Investment Income Tax thresholds
• Don’t overcommit: Only defer income or accept equity grants if you understand the long-term cash flow impact
• Ask for a comp summary: Have HR or your planner break down everything in plain terms

Finally, use tools like your company’s equity portal, compensation statements, and this free Executive Comp Checklist to stay organized.

Final thought

Your executive compensation package depends less on what’s offered and more on what you actually understand and plan around. The real risk is committing to something without knowing how it works or how it fits into your bigger financial picture.

If you’re stepping into a new role or reviewing your current comp structure, now’s the time to stop guessing and start planning.

→ Download the Executive Comp Checklist
→ Book a call to review your offer

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