Common mistakes C-suite executives make when negotiating compensation

It’s important for executives to acknowledge that negotiating compensation at the C-suite level is an intricate process. Unlike entry or mid-level positions, where negotiation might focus primarily on salary, executive compensation typically includes a complex mix of base pay, bonuses, equity, benefits and perks.

At this level, mistakes can cost millions of dollars or damage professional relationships. Even the most experienced leaders sometimes falter during such negotiations. Therefore, it’s generally wise to explore the most common mistakes C-suite executives make when negotiating their pay and how to avoid them.

Underestimating their market value

One of the biggest missteps executives make is failing to research and understand their worth in the market. C-suite roles demand specialized skills and a proven track record, and candidates often underestimate how much companies are willing to invest in the right leader. Instead of relying solely on the company’s initial offer, C-suits ought to benchmark against:

• Industry standards
• Peer compensation
• Company size

Thorough research can help ensure that an executive does not accept a package that falls short of their potential earnings.

Focusing solely on base salary

While base salary is important, it’s only a fraction of the total compensation package at the executive level. When negotiating compensation, C-suits should also factor in:

• Bonuses
• Stock options
• Long-term incentives
• Benefits (retirement contributions, health insurance, relocation packages, private club memberships)

Taking a holistic approach to compensation requires assessing the total package, including short-term and long-term incentives.

Ignoring the fine print

Executive contracts often come with complex clauses related to:

• Severance
• Performance metrics
• Vesting schedules

Overlooking these details can have serious implications down the line. C-suits should ascertain that the terms of their contract align with their understanding of the deal and protect their interests in scenarios like mergers, terminations or underperformance.

Being overly aggressive

While advocating for oneself is important, coming across as too aggressive or inflexible can backfire. Negotiations are a two-way street, and an adversarial tone can erode trust before an executive even starts their role. C-suits should approach the negotiation with confidence and collaboration.

C-suite compensation negotiations are high-stakes discussions that require hands-on legal support, strategy and tact. Those affected can more effectively secure a deal that reflects their worth by understanding their market value, focusing on the total package, paying attention to contractual details and balancing assertiveness with collaboration.