Executive Compensation Analysis

I've written the full framework, the internal equity review and a VP Sales offer structure. None of it is priced against the market yet: you have no survey data, and "very competitive" has no figures behind it. So every market percentile, salary band and role premium reads

NO BENCHMARK DATA. Everything else comes from your figures and I recalculated it with a script.

What I found

Check your 409A first. $210M post-money ÷ 52M shares is about $4.04 per share. Your 409A of $3.85 is about 95% of that, which is unusually high. If that's right, new options are barely in the money at the last round's valuation. For a 0.10% grant at a $210M exit, the holder's gain is $9,800. That weakens the equity part of the VP Sales offer, so confirm the share count and 409A with your provider before November.

Aisha is right on cash. Her base is $10,000 below Jonah's and her target cash $12,000 below, with 4.7× his team. She has more equity (0.8% vs 0.5%), but it's mostly a 2022 grant that is probably largely vested, with no refresh since 2024. Matching Jonah's base costs $12,000 a year in target cash. That's only a floor; where she should sit in the band needs market data.

Samir needs action this quarter, not at Q1. His base is $25,000 below Clare's and his bonus target is 15% while two VP peers are at 20%. Options:

• Raise his bonus target to 20%: +$10,500 a year.
• A retention grant of 0.10–0.30%: $200,200–$600,600 at the 409A price, using 2.3–6.8% of the available pool.
• The CFO earning more than the founders isn't a problem in itself. The founders hold 18.5% and 9.0% (about $37.0M and $18.0M at the 409A price) against her 1.4%. The real board questions are whether founder cash is below market, whether that's deliberate, and the fact that the CEO has no unvested equity left with a 4–6 year exit ahead. Raising both founders to the CFO's base would cost $65,000 a year. Don't cut the CFO's pay.
• VP bonus targets are inconsistent (15%, 15%, 20%, 20%). Putting every VP on 20% costs $22,250 a year.

Refresh grants: the document has a written rule ready for the committee. Grants are sized off the level guideline rather than each person's original grant, with a review trigger when unvested equity runs low, a yearly budget cap and a pool guard. The actual percentages still need benchmark data.

VP Sales offer. The previous package ($180,000 base / $360,000 total target pay, split 50:50) is a floor, not a market number.

Equity: stay within your own VP range of 0.5–0.9%, which uses 11–20% of the 4.4% available pool. Anything above 0.9% goes to the committee.

• Variable pay: paid on new ARR. Last year's net new ARR was about $9.19M.

• Ramp guarantee: optional, up to $90,000.

• Before finalists arrive: the committee should approve the range, and you need three things:

  • a dated survey cut for VP Sales;
  • the recruiter's actual recent placement figures;
  • each finalist's current pay.

  Also ask how the recruiter's fee is calculated. If it's a percentage of first-year cash, their read of the market isn't neutral.

Cost of the recommended changes: Aisha's floor plus the VP bonus change add $34,250 a year, taking team target cash from $1,764,000 to $1,798,250. A VP Sales hire at the floor takes it to $2,158,250, and founder parity to $2,223,250.

Section 10 lists 13 open questions, with benchmark data, recruiter figures, the 409A check and cap-table detail (strike prices and grant dates) at the top. This is decision support only. A tax adviser and employment counsel need to confirm the tax and acceleration content, and a compensation consultant or the committee signs off on bands and CEO pay.

There are no other copies of it.

---

The file it wrote: Quarrystone-Executive-Compensation-Framework.md

Quarrystone Software: Executive Compensation Framework, Internal Equity Review, and VP Sales Offer

Status: Draft decision support, dated 1 October 2026. Prepared for management review before it goes to the Compensation Committee. It is not a decision, and nothing here should reach an executive, a candidate, or a board member until you have reviewed it.

Read this first: there is no market data in this document. You haven't pulled survey data yet, and the recruiter's comment that the market is "very competitive" has no figures behind it. So every market percentile, band, and premium below reads

NO BENCHMARK DATA. Everything else comes from your brief or is calculated from it:

• current pay and the gaps between executives
• equity share counts and values at the 409A price
• pool capacity
• the cost of each option

The document gives the structure, the rules, and the cost of each decision. The benchmark data still has to supply the market levels. Section 10 lists what's needed and when.

Conventions

• "Value at 409A" = shares × $3.85. For options this is the

gross share value, not the economic value to the holder. The holder's real value is the spread above the strike price, and you haven't supplied strike prices.

• "Equity (Annual)" = value at 409A ÷ 4-year vest, applied to each executive's current holding. It assumes each holding is a single 4-year grant. Section 1 notes where that is wrong or unknown.
• 0.10% of fully diluted shares = 52,000 shares = $200,200 at 409A = $50,050 per year over 4 years. That is the cost unit for every equity option in this document.

---

1. Current Compensation

Team totals (7 incumbents): base $1,555,000 · target bonus $209,000 · target cash

$1,764,000. Adding a VP Sales at the previous OTE brings target cash to $2,124,000.

Pool position:

• Pool is 14% FD = 7,280,000 sh.
• Granted: 9.6% = 4,992,000 sh.
• Available: 4.4% = 2,288,000 sh = $8,808,800 at 409A.
• The five non-founder executives hold 4.2% FD (2,184,000 sh), which is 43.75% of everything granted from the pool.

Estimated vesting and unvested value. This assumes one grant per person, vesting from their start date on 4 years with a 1-year cliff, measured to October 2026. Confirm against the cap table.

Components you didn't supply: strike prices for every grant, grant dates and vesting schedules beyond the CFO's, the previous VP Sales grant, the CTO's remaining vesting schedule, benefits and perquisites, and any acceleration terms.

Data check: 409A versus the round price. Series B post-money $210M ÷ 52,000,000 FD shares ≈

$4.04 per share. Your 409A of $3.85 is about

95% of that. If 52M is the post-round share count, then new options carry almost no spread at the last round's valuation. That weakens the equity part of every offer, including the VP Sales offer. Please confirm the share count and the 409A basis with your 409A provider.

---

2. Compensation Philosophy and Market Positioning

A. Guiding principles (proposed for Committee adoption)

1. Pay competitively on cash; win on ownership.
   • Quarrystone is a Series B company growing 62% with a 4–6 year exit horizon. Equity is the lever that matches that horizon.
   • But only 4.4% of the pool is free, so equity can't be handed out generously. Each grant is sized against what the pool can afford.
2. Pay for company performance first.
   • With seven executives and one company plan, bonuses are weighted mainly to company metrics: ARR, retention, efficiency.
   • Revenue leaders get a variable plan tied to the revenue they own instead of the standard bonus.
3. One band and one bonus target per level.
   • Every executive at the same level sits in the same salary band and has the same target bonus %.
   • Placement within the band reflects scope (team, budget, revenue owned), performance, and the market for the function.
   • Any difference from a same-level peer must be explainable in writing. Team size alone doesn't set level or pay.

Founders are a separate case. Founder cash is set by the Board on the Committee's recommendation. Founders are not judged against executive bands until the Board has decided where founder cash should sit.
5.

Single US national band for executives. All executives work remotely within the US and are hired nationally, so there are no location differentials. Revisit this if benchmark data shows a material difference by location.
6. Rules over negotiation.

• New-hire grants, refresh grants, and exceptions follow written rules.
• Exceptions go through the checklist in Section 9.

B. Market positioning

These are policy targets. None can be priced until benchmark data is in hand.

C. What the plan rewards

• ARR growth.
• Retention and expansion: Customer Success carries 42 of the 180 people.
• Capital efficiency.
• Delivery of the platform rebuild, which you identified as critical.

---

3. Level and Role Family Framework

A. Levels

All four VPs and the VP Sales role map to

E3. Splitting VPs into two tiers based on Aisha's 42-person team against Jonah's 9 would add a level for one comparison. Scope is handled by

placement within the band instead (Section 7).

You gave team sizes only for Marketing (9) and Customer Success (42). Section 10 asks for the rest, plus reporting lines (for example, does Samir report to Ravi?).

B. Role families

---

4. Base Salary Bands

Current internal ranges, for reference only (not bands):

• E5 non-founder: $265,000 (CFO only).
• E5 including the CTO: $225,000–$265,000 (17.8% spread).
• E3: $185,000–$235,000 (27.0% spread).

How the bands will be built once data arrives:

• Midpoint = the Section 2 target percentile for each level, drawn from a named, dated survey.
• The peer group is US vertical or B2B SaaS at a comparable ARR and funding stage. The Committee confirms the exact definition.
• Spread is set by the Committee.
• New hires usually start between minimum and midpoint.
• Anything above maximum needs Committee approval (Section 9).
• No current executive's base is reduced if they sit above a new band. They are held at their current base until the band catches up.

---

5. Incentive Structure

A. Bonus targets by level

The market level of each target is NO BENCHMARK DATA. The proposal fixes inconsistency inside the company; it doesn't place anyone against the market.

B. Plan mechanics

Period: annual, matching the fiscal year (Section 10 asks whether that is the calendar year). Paid after the audited or closed year-end numbers.

• Formula: Bonus = Base × Target % × (Company factor × company weight + Individual factor × individual weight).
• Worked example using Aisha's actual numbers:
  • At target: $185,000 × 20% × (1.00 × 0.75 + 1.00 × 0.25) = $37,000, which matches her stated target.
  • With a company factor of 0.90 and an individual factor of 1.10: $37,000 × (0.675 + 0.275) = $37,000 × 0.95 =

$35,150.

C. Company metrics

Thresholds, targets, and maximums must come from the board-approved FY2027 operating plan, which you haven't supplied. The weights are a starting proposal for the Committee.

Payout curve: zero below threshold. Payout rises in a straight line between threshold, target, and max. The Committee sets the threshold payout % and the maximum payout %.

Individual component (25% for VPs): 2–4 written goals per executive. For Samir, platform rebuild milestones. For Aisha, gross revenue retention or NRR if she owns renewals.

---

6. Equity Guidelines

A. New-hire grants by level

Method:

• Grant in

% of fully diluted shares. That's how the board and cap table think, and it's the measure the pool limits.

• Show candidates the share count, the value at 409A, and the exit illustration in 8A.
• Revisit a dollar-value method as the exit approaches.
• Placement within the range depends on scope, competing offers (documented), and internal equity. Any grant above the highest current holding at that level (0.9% for VPs) needs Committee approval.

B. Vesting

• Standard (unchanged): 4 years, 1-year cliff, monthly after that.
• Refresh grants (proposed): 4 years, monthly, no cliff. The holder has already passed a cliff once.

Acceleration: you haven't said whether any executive has change-of-control acceleration (Section 10). A 4–6 year exit horizon makes this a likely negotiation point for VP Sales finalists. Set one executive-wide policy with employment counsel instead of agreeing to terms one offer at a time.

C. Vehicles

D. Written refresh-grant rule (proposed for Committee adoption)

Eligibility: E3 and above, at least 12 months in role at the grant date, and a performance rating of at least "meets". Founders are excluded and handled by the Board.
2.

Cadence: one grant cycle a year, approved at the Committee meeting after the annual review. Off-cycle grants happen only as retention exceptions (Section 9).
3.

Sizing: refresh = tier % ×

the current guideline midpoint for the level, not the person's original grant. This stops past inconsistencies being copied forward. The Committee sets the tier %s (exceptional / strong / meets / below = 0) once level guidelines exist.
4.

Unvested floor (trigger for review): any executive whose estimated unvested value at 409A falls below a Committee-set floor is reviewed at the next cycle, regardless of tier.
5.

Budget cap: total executive refresh grants in any 12 months must stay under a Committee-set % of FD. Each cycle reports usage against the pool.
6.

Pool guard: no cycle may leave the available pool below the forecast 12-month hiring need. Hitting that guard triggers a request to the Board to top up the pool.
7.

Catch-up for 2025–2026: there have been no refreshes since 2024. The first cycle under this rule (Q1 2027) runs for every eligible executive, with the unvested-floor check applied first.

E. Pool budget pressure

The 4.4% available (2,288,000 sh) has to cover all of these until the next pool increase:

• VP Sales: at the internal VP range of 0.5–0.9%, that is 11.4%–20.5% of the available pool.
• Samir's retention grant.
• The 2027 refresh catch-up.
• All hiring below executive level as headcount grows.

You haven't supplied trailing 12-month grant usage or the hiring plan, so the length of the pool's runway is unknown. Ask finance for a forecast before Q1.

---

7. Internal Equity and Pay-for-Performance Review

Market Position reads NO BENCHMARK DATA for everyone, because no benchmark was supplied. You haven't supplied performance ratings either, so pay-for-performance alignment can't be assessed yet (Section 10).

Aisha's concern, in plain terms:

• She is right on cash. Base is $185,000 against $195,000, and target cash $222,000 against $234,000.

Equity cuts the other way on paper: 0.8% against 0.5%, or $400,400 against $250,250 a year at 409A. But that comparison is weak. Strike prices are unknown, and her grant is older and likely mostly vested.

• Whether Customer Success should be paid at or above Marketing at the same level depends on the market for each function. You don't have that data yet. Under principle 3, scope (42 people) pushes her placement upward within the same band.

---

8. Recommendations

Each recommendation shows its cost and the input it rests on.

8A. VP Sales offer

Six-step offer process:

1. Level: E3 VP, Revenue family. It reports to the CEO (please confirm).

Benchmark: NO BENCHMARK DATA. The recruiter's "very competitive" has no figures. Before finalists arrive in November, get three things:

• a dated survey cut for VP Sales at comparable-stage SaaS (base, OTE, and new-hire equity);
• the recruiter's own placements in the last 12 months, with figures;
• each finalist's current base, OTE, attainment history, and unvested equity.

Also ask how the recruiter's fee is calculated. If it is a % of first-year cash, their view of the market isn't neutral.
3. Internal equity check:

• A $180,000 base would be the lowest VP base, which is normal for a 50:50 role.
• A $360,000 OTE would exceed every executive's target cash, including the CFO's $331,250. That is expected for a quota-carrying role, but the Committee should see it.
• Equity above 0.9% FD would exceed every current VP and needs Committee approval.

4. Total comp model: the table below.

Approval: no band exists yet, so the

Committee approves the offer range (by written consent if needed) before the recruiter takes numbers to finalists.
6.

Presentation: show total comp, the variable plan mechanics with worked payout examples, the equity share count, the strike price, and the exit illustration below.

Offer table:

Equity illustration for candidates. This is hypothetical. It ignores future dilution and the liquidation preference stack, neither of which you supplied. Each 0.10% FD (52,000 sh) at a $3.85 strike costs $200,200 to exercise.

Because the 409A sits so close to the round price, the option story depends entirely on growth. A seasoned VP Sales will work this out. It is the strongest argument for checking the 409A data point in Section 1 before the November offers.

8B. Samir Haddad: retention, now (don't wait for Q1)

Retention tools and costs:

8C. Aisha Rahimi: answer her concern with a date, not a promise of a number

• Acknowledge that the cash gap is real. Commit to a decision once the VP band exists, before the Q1 2027 meeting.

Parity floor (internal reference, not market): base $185,000 → $195,000 =

+$10,000 base, +$12,000 a year in target cash (including 20% bonus on the increase).

• Under principle 3, her scope argues for a placement

above Jonah's in the band. How far above depends on benchmark data.

• Bring her into the first refresh cycle, with the unvested-floor check applied. If she owns renewals or expansion, add GRR/NRR to her individual goals (5C).

8D. CFO base above the founders: is it a problem?

Not in itself.

• The founders hold 18.5% ($37,037,000 at 409A) and 9.0% ($18,018,000). The CFO holds 1.4% ($2,802,800).
• Founders taking below-market cash in exchange for ownership is a common and often deliberate choice.
• The CFO is the only externally hired C-suite executive, and her pay reflects what it took to hire her.

The real board questions are these

1. Is founder cash below market? NO BENCHMARK DATA for CEO or CTO.
2. Is it intentional? Ask Elena and Ravi.

Incentive and retention. The CEO is fully vested and the CTO is 75% vested, against a 4–6 year exit. Should the Board consider founder grants or a CEO bonus?

Options and costs:

• (a) No change: $0.
• (b) Bring both founders to the CFO's base, as internal parity only: +$65,000 a year (CEO +$25,000, CTO +$40,000).
• (c) Add a CEO bonus target: amount set by the Board.

Don't reduce the CFO's pay. CEO pay is recommended by the Committee and approved by the Board, not set by management.

8E. Framework adoption

Cash roll-up:

All figures exclude any market-driven adjustments, which can't be sized yet.

8F. Timeline

• October 2026: buy benchmark data. Close the Section 10 data gaps. Hold the Samir conversation.
• Late October / early November: Committee approves the VP Sales offer range and the Samir package.
• November–December: VP Sales offer. Aisha told the decision date.

Q1 2027 board meeting: adopt the philosophy, bands, refresh rule, FY2027 bonus plan, and the founder pay decision. Run the first refresh cycle.

---

9. Governance and Approval Matrix

Quarrystone has no named HR head in the brief. Until one is named, the "HR head" column means the person the CEO designates; confirm who (Section 10).

Exception checklist (required for anything outside band, guideline, or rule):

1. Business case in writing. Why this person, why now, what's unique.
2. Precedent risk. Will peers expect the same? Can the difference be explained?
3. Internal equity check against every same-level peer in Section 7.
4. Approval at the level shown above.
5. Record the rationale and approval chain, with an end date if the exception is temporary.

Board materials for Q1 2027:

• one-page philosophy (Section 2);
• detailed schedule (Section 1 plus the market column once benchmarked);
• peer group definition and data sources;
• annual recommendations: merit budget, refresh budget, new-hire ranges;
• decision memos for VP Sales, Samir, Aisha, and founder pay. Each memo covers: decision requested, background, options with costs (Section 8), recommendation, and supporting market data.

Sign-off required:

• A compensation consultant or the Committee signs off on the bands and CEO pay.
• A tax adviser and employment counsel confirm the vehicle, ISO-limit, acceleration, and clawback content.

---

10. Open Items

Questions for you, in priority order:

Benchmark data. Which survey will you buy, and can a dated cut for E3–E6 and VP Sales (base, bonus or OTE, new-hire equity % FD) arrive by late October? Without it, every band and market position stays empty.
2.

Recruiter data. Can the recruiter give actual figures for their recent VP Sales placements and each finalist's current comp? How is their fee calculated?
3.

409A check. Is 52,000,000 the post-Series B FD count? If so, the 409A ($3.85) is about 95% of the implied round price (≈$4.04). Is that right?
4.

Cap table detail. Strike prices, grant dates, and vesting schedules for every executive grant. Specifically: how Samir's 0.6% splits across grants, Aisha's grant history, the CTO's remaining 25% schedule, and the previous VP Sales grant and how much of it returned to the pool.
5. Pool usage. Trailing 12-month grants and the 2027 hiring plan, so the 4.4% runway can be forecast.
6. Cash. Current runway and burn. This sets how far cash positioning can go.
7.

FY2027 operating plan. ARR, NRR, and efficiency targets for the bonus metrics, the VP Sales quota, and the fiscal year-end.
8.

Scope. Team size and reporting line for Product, Engineering, the CTO, and the CFO. Does Customer Success own a renewal or expansion number?
9.

Performance ratings for each executive. They are needed for merit, refresh tiers, and the pay-for-performance review.
10. Acceleration and severance. Does any executive have change-of-control or severance terms today?
11. Founders' intent. Is Elena's and Ravi's below-CFO cash a deliberate choice?
12. HR owner. Who prepares compensation decisions in the approval matrix?
13. Benefits and perquisites, to complete the total compensation view.