We are three years away from an exit, but one of our most capable leadership team members has mentally checked out because they do not have equity and feel they have no skin in the game for the final valuation push. How do we re-engage a capable but unmotivated leader without handing out equity recklessly?

Question

Tyler Smith · Accepted Answer

It is a common mistake to assume that the only way to motivate a key leadership team member is to hand out equity. Doing so out of desperation often dilutes your ownership and complicates a clean exit. Instead, you need to have a direct, transparent conversation to address this capability and motivation gap.

Start by using the GWC™ framework. Does this leader truly get, want, and have the capacity to do their job during this high-growth phase? If they want the seat, their current lack of motivation is likely a lack of alignment, not capability. Sit down with them outside of your regular meetings and have an honest conversation about their future.

Explain the exit strategy and how their role directly impacts the company valuation. Even without direct equity, you can align their personal success with the company success by designing a phantom stock plan, a transaction bonus, or a stay-bonus program. This structure rewards their executive capability and keeps them focused on building an exit-ready superstructure without complicating your cap table for potential buyers.

If you establish these clear financial incentives and they still remain mentally checked out, you no longer have a capability issue; you have a core values or attitude issue. A leadership team member who is unwilling to row in the same direction as the rest of the company is a liability. If they cannot commit to the vision, you must begin planning their transition out of the seat to protect your exit timeline.