Executive Compensation
Independent executive compensation advisory for mid-market and PE-backed companies. STI/LTI design, board-ready materials, and compensation committee support.
Executive Compensation That Drives the Right Outcomes
Executive pay gets complicated fast. Short-term incentives, long-term equity vehicles, change-in-control provisions, retention arrangements, deferred compensation, and the constant pressure to stay competitive while maintaining defensibility.
The Barksdale Group provides independent executive compensation advisory for mid-market companies, PE portfolio companies, and organizations that need expert analysis without the price tag of a Big 4 engagement.
What Executive Compensation Consulting Covers
Executive Pay Benchmarking. We benchmark C-suite and VP-level roles against relevant peer groups using proxy statement data (for public companies), proprietary survey data (Mercer, Radford, SullivanCotter), and private company compensation databases. Every benchmarking study documents peer group selection criteria, data sources, and match methodology so the analysis is defensible for board review or investor scrutiny.
For a mid-market PE-backed technology services company, we constructed a peer group using three criteria: revenue range (0.5x to 2.0x of the client), industry alignment (IT services and professional services), and ownership structure (PE-backed where possible). We evaluated 40 potential peers, selected 15, and documented the inclusion/exclusion rationale for each. The resulting benchmarking showed the CEO's total compensation positioned well below the board's stated philosophy, creating retention risk that the board needed to address before the next review cycle.
Short-Term Incentive (STI) Plan Design. Annual bonus plans need clear architecture: performance metrics and weightings, threshold/target/maximum payout curves, individual performance modifiers, and funding mechanisms. We design STI plans that connect incentive payouts to the financial and operational outcomes that actually matter to your business.
Our STI design process follows a structured methodology:
Strategy alignment session
We work with your leadership to define what the incentive plan needs to accomplish. Revenue growth? EBITDA margin? Customer retention? Safety metrics? The plan architecture follows the strategy. For PE portfolio companies, this session typically includes the operating partner to ensure the plan aligns with the value creation thesis.
Metric selection and weighting
We evaluate potential metrics against four criteria: measurability, controllability, line of sight, and strategic importance. Most plans work best with 2-4 metrics. More than that dilutes focus. We also stress-test proposed metrics against historical data to confirm the plan would have differentiated meaningfully between strong and weak performance periods.
Payout curve calibration
We set threshold, target, and maximum performance levels using historical data and forward projections. The curve determines how much pay-for-performance differentiation the plan creates. We model payout distributions under multiple performance scenarios so leadership understands the cost envelope before approving the design.
Individual modifier design
We build the individual performance adjustment mechanism that allows managers to differentiate payouts within the funded pool. Typical modifiers range from 0.8x to 1.2x. The modifier prevents a purely formulaic plan from rewarding poor individual contributors during strong company years.
Plan document and communication materials
We draft the formal plan document, governance provisions (approval thresholds, amendment process, clawback language), and participant-facing summaries in plain language.
What clients receive from an STI engagement: A plan design document with metric definitions, weighting rationale, payout curves with scenario modeling, governance provisions, an Excel-based payout calculator with formulas your finance team can operate, and participant communication materials ready for distribution.
Long-Term Incentive (LTI) Design. Equity and equity-equivalent programs for retention and alignment:
- RSU and PSU design for public companies, including vesting schedules, performance conditions, and grant sizing methodology
- Phantom equity and profit interest structures for private companies, including valuation approach, vesting triggers, and settlement mechanics
- Stock option programs with exercise price, vesting, and post-termination exercise window design
- Retention award architectures with targeted eligibility and cliff/ratable vesting structures
- Management incentive plans (MIPs) for PE portfolio companies that align management upside with investor return thresholds
LTI vehicle selection depends on context. A public company with broad-based equity participation and proxy advisor scrutiny needs a different vehicle mix than a PE-backed company designing a management carve-out for a 3-5 year hold. We evaluate each vehicle against your ownership structure, tax treatment, accounting impact, dilution tolerance, and retention objectives before recommending a design.
Board and Compensation Committee Support. We build the materials your committee needs to make informed decisions:
- Tally sheet preparation showing the full compensation picture for each named executive
- Pay-versus-performance analysis comparing realized and realizable pay against company performance
- ISS and Glass Lewis alignment reviews (for public companies) to assess say-on-pay risk
- Peer group construction and annual refresh with documented selection methodology
- Meeting materials including executive summaries, benchmarking presentations, and decision frameworks
- Compensation committee charter development for companies formalizing governance
Pay Philosophy for Senior Leadership. Executive compensation philosophy often needs its own articulation, separate from the broad-based program. Boards and operating partners need to align on questions like: Where do we want to position total compensation relative to peers? What proportion of pay should be at risk? How do we balance competitiveness with cost discipline? We facilitate these discussions and document the resulting philosophy so it anchors future design decisions rather than being renegotiated every cycle.
Change-in-Control and Separation Analysis. We model the compensation impact of M&A transactions, including 280G golden parachute calculations, double-trigger acceleration provisions, and separation agreement cost scenarios. See our M&A compensation practice for the full integration framework.
Government Contractor Executive Compensation. For defense contractors, executive compensation must also pass DCAA reasonableness testing under FAR 31.205-6. We model total compensation against the applicable caps and design structures that maximize allowable cost recovery while remaining competitive.
How Executive Comp Connects to the Broader Architecture
Executive compensation does not exist in isolation. The incentive plan metrics should reinforce the same strategic priorities that cascade through the broad-based incentive program. The executive salary structure should align with the grade architecture that governs the rest of the organization.
For PE portfolio companies in particular, executive compensation design is often the first workstream in a broader compensation infrastructure build. The management incentive plan needs to be in place early in the hold period, but the organization also needs a salary structure, job architecture, and operational tools. We sequence these workstreams so the executive program and the broad-based infrastructure reinforce each other.
Who This Is For
- PE portfolio companies that need management incentive plans aligned with value creation and exit strategy
- Mid-market companies designing or redesigning their annual bonus program
- Organizations preparing for compensation committee formation or formalization
- Companies undergoing ownership transitions that trigger executive compensation restructuring
- Government contractors who need executive compensation that passes DCAA reasonableness testing
What You Get
- Executive compensation benchmarking report with peer group methodology, survey data analysis, and market positioning assessment
- STI plan design document with metrics, weightings, payout curves, governance provisions, and an Excel-based payout calculator
- LTI framework with vehicle selection rationale, grant sizing methodology, and vesting schedule design
- Board-ready presentation materials suitable for compensation committee review
- Tally sheets and pay-versus-performance analysis for named executives
- Implementation timeline with communication plan and participant enrollment process
Frequently Asked Questions
An executive compensation consultant provides independent analysis and recommendations on how to pay senior leaders. This includes benchmarking against market data, designing incentive plans (bonus and equity), preparing materials for board compensation committees, and supporting compliance with regulatory requirements. The work is analytical and strategic, not administrative.
Most executive annual bonus plans use a formulaic approach: a target bonus expressed as a percentage of base salary (often 30-60% for VP-level, 50-100% for C-suite), tied to 2-4 performance metrics (commonly revenue, EBITDA, and operational KPIs). Performance below a threshold floor (often around 80% of target) pays zero. Performance above a maximum cap pays a capped maximum, typically 150-200% of target bonus.
Section 280G of the Internal Revenue Code imposes a 20% excise tax on "excess parachute payments" triggered by a change in corporate control. If an executive's change-in-control payments exceed three times their base amount (average W-2 compensation over the prior five years), the excess is subject to the excise tax and the company loses its tax deduction. We model 280G exposure to quantify risk before transactions close.
Private companies lack the public proxy disclosure that public companies have. We use published survey data from Mercer, Radford, and SullivanCotter, combined with private company compensation databases and industry-specific benchmarking sources. For PE portfolio companies, we also reference PE-specific compensation surveys that capture carry, co-investment, and MIP structures.
Executive compensation benchmarking and incentive plan design engagements typically range from $15,000 to $35,000 depending on the number of executive roles, the complexity of the incentive design, and whether board/committee support is included. For PE portfolio companies requiring ongoing committee advisory, we offer retainer arrangements.
Ready to get started?
Every engagement begins with a conversation. Tell us about your organization and we will tell you exactly how we can help.