The uncomfortable truth about how we’re paying CEOs at the best tech companies wrong— and why it’s creating the wrong incentives for growth.
A Candid Conversation with Brian Halligan Chair and Co-Founder of HubSpot on CEO Comp Reality
We sat down on 20VC + SaaStr podcast with HubSpot co-founder and former CEO Brian Halligan for an unfiltered discussion about CEO compensation. What emerged was a masterclass in why our current approach is fundamentally broken — and what forward-thinking companies are doing differently.
“CEO comp is pretty broken at the moment,” Halligan said bluntly. “And there’s two things that I think are pretty broken about it.”
The conversation revealed insights that most compensation committees would rather not discuss publicly. But for companies serious about aligning leadership incentives with exponential growth, these uncomfortable truths are essential.
The $20 Million Problem That Doesn’t Matter
Here’s a thought experiment that’ll make your head spin: What if paying your CEO $20 million a year is actually… meaningless?
That’s the reality facing compensation committees today, especially when dealing with founder-CEOs who’ve already built significant wealth. Take Dylan Field at Figma — if you benchmarked his compensation against peers at similar market cap companies, he’d earn around $20 million annually. But here’s the kicker: that represents just 3% of his personal net worth. It literally doesn’t move the needle.
The core issue? We’re using outdated frameworks to solve modern compensation challenges.
The Two Fundamental Breaks in CEO Compensation
After analyzing hundreds of compensation packages across SaaS and tech companies, two critical problems emerge:
Break #1: The RSU Addiction That’s Killing Risk-Taking
The Old Days vs. Today:
Pre-2006: CEO packages heavily weighted toward Incentive Stock Options (ISOs)
Post-2006: Regulatory changes pushed companies toward Restricted Stock Units (RSUs)
“Everyone really relies heavily on RSUs,” Halligan explained. “And when I grew up in the industry — I hate to be that guy, like back in the old days — it was mostly ISOs. It was options until 2006 and regulations changed and the expensing of that changed. So the world kind of moved to RSUs.”
Why this matters: RSUs are essentially guaranteed money — they’re like options with a zero strike price. You get them regardless of performance (as long as you stay employed). This creates fundamentally risk-averse behavior.
“It just creates sort of a risk-averse behavior in the CEO,” Halligan noted. “Like it’s basically cash comp goes up and down a little bit, let’s say, but an ISO you’re swinging for the fences like you got a strong incentive to swing and so it’s really had a dampening effect on the risk-seeking behavior of a CEO that I think more companies should want.”
The psychological impact is massive. ISOs forced CEOs to think like founders — your equity is only worth something if you create massive value. RSUs let CEOs think like employees — you get paid for showing up.
Break #2: The Peer Benchmarking Trap
Here’s how compensation committees typically work:
Identify 15-20 “peer” companies of similar size/stage
Target paying CEO at 75th percentile of peer group
Set compensation accordingly
Pat themselves on the back for being “market competitive”
Halligan walked us through the reality: “HubSpot’s got a compensation committee. Everyone’s got a compensation committee. And HubSpot wants to pay the CEO, let’s say, at the 75th percentile of what her peers make. And so we look at 20 different peers of similar size companies… And we peg her at that 75th percentile, which in her case is, you know, it’s 20 million bucks. A lot of money.”
The fatal flaw: This system assumes all CEOs have the same financial motivation profile.
“Now, if you did that for Dylan [Field], which would be in our comp group, similar market cap to HubSpot, he’d make 20 million bucks a year. But if you think about it, that’s less. That’s like 3% of Dylan’s market cap of his own personal net worth. It doesn’t move the needle an iota. It doesn’t matter at all to him.”
The Dylan Field Case Study: Getting Creative with Compensation
Figma’s approach to Dylan’s compensation package offers a fascinating glimpse into next-generation CEO comp design:
What they did differently:
Heavy use of Performance Stock Units (PSUs) instead of traditional RSUs
Compensation sized relative to CEO’s net worth, not just peer benchmarks
Created a “$2 billion moonshot” structure (Elon Musk-style ambitious targets)
“And so, you have to get kind of creative,” Halligan observed. “And so, I actually like what they did with his comp. They use PSUs very heavily, not RSUs. And