What should be the target bonus for an executive as a percentage of their salary? We referred to Pave’s study of over 2,700 executives.
Ranges from 20% for VPs of HR to 100% for VPs of Sales. Getting these proportions wrong can affect retention or misalign incentives for top executives.
Important note: Many tech executives have a 100% salary with no variable pay. This study focuses only on those with variable pay plans. One of the best CROs I’ve known had zero variable compensation—uncommon, yet it shows that you don’t have to follow traditional methods!
The Detailed Analysis 📈
According to an analysis of over 2,700 execs with specific variable pay plans:
Sales & Revenue Leaders (The Big Earners) 💰
- VP of Sales: 100% of base salary
- SVP of Sales: 100% of base salary
- Chief Revenue Officer: 85-100% of base salary
Executive Leadership 👔
- Chief Executive Officer: 50-100% of base salary
- Chief Financial Officer: 30-40% of base salary
- Chief People Officer: 40-50% of base salary
- Chief Product Officer: 40-50% of base salary
- Chief Technology Officer: 15-35% of base salary
- Chief Marketing Officer: 30-50% of base salary
VP-Level Roles 📊
- VP of Business Development: 25-35% of base salary
- VP of Customer Success: 20-30% of base salary
- VP of Engineering: 30% of base salary
- VP of Finance: 30% of base salary
- VP of Product: 30% of base salary
- VP of Marketing: 25-30% of base salary
- VP of HR: 20-25% of base salary
This data isn’t groundbreaking, but it serves as a useful benchmark if you are developing a bonus-based compensation plan for your executive team.
Key Insights from the Data 🎯
1. Sales and revenue leaders generally have a 50/50 split This represents the most assertive total target cash allocation for any executive role.
2. CTOs typically have lower bonus percentages than CPOs This likely reflects varying risk profiles. CPOs face significant bets that can determine the success of quarters, while CTOs concentrate on execution, quality, and long-term technical stability.
3. Most other executive roles fall within the ~20-30% range
4. Variable pay as a percentage of base tends to rise as companies grow (This analysis combines all company stages)
Implications for Your Compensation Strategy 💡
The Pattern is Clear:
- Revenue-generating roles = highest variable pay
- Strategic decision-making roles = moderate-high variable pay
- Operational roles = lower variable pay