We are starting to prepare our business for an exit, and my leadership team is demanding equity or phantom stock options before they commit to our scaling plan. How do I handle compensation and incentives without giving away control of my company?

Question

Tyler Smith · Accepted Answer

It is completely natural for a high-performing leadership team to want a share of the value when they know an exit is on the horizon. If you want them to build an exit-ready superstructure and execute your scaling plan, you must align their incentives with your transition goals. However, giving away actual voting equity is rarely the right move and can complicate the eventual transaction.

Instead, you should look at structured incentive programs like phantom stock, synthetic equity, or stay bonuses. These tools allow you to reward your team for the value they create without giving away ownership or control of the business. It aligns their personal financial goals directly with the enterprise value of the company.

Bring this topic to your Integrator first to design a structured plan. The incentive should be tied directly to achieving the long-term goals outlined in your V/TO®. For example, a pool of money can be distributed only if the company hits specific valuation targets and the leadership team members remain with the business through the transition. This keeps them focused on executing their Rocks and ensures stability, which potential buyers love. Be transparent about the structure so everyone is rowing in the same direction.