Equity Compensation in Private vs. Public Companies: Key Differences for Execs

Authored by FW Cook’s Lauren Spencer and Jin Fu for Pave. 

Equity compensation for executives is an important tool for rewarding long-term performance and alignment with shareholder interests. Differences between public and private company equity program design are primarily due to differences in company risk profile and stage of growth. Equity for private companies emphasizes future potential value and rewarding high growth, while public companies have a greater focus on more stability and sustained performance.

‍This article explores three key differences in executive equity compensation practices between private and public companies: equity vehicles, equity denomination, and equity grant frequency. This analysis focuses on private companies that intend to go public or pursue a strategic sale, rather than those that plan to remain private indefinitely.

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