“It’s not about the money,” says the CEO, while negotiating for more of it. Experienced directors have heard this before. But the truth is, executive compensation is rarely just about the money.
Leaders also value recognition, purpose, autonomy and status—complex needs that money can’t buy. When executives feel genuinely valued across these dimensions, they’re less likely to use compensation demands as proxies for validation and more likely to focus on their job. In today’s extremely volatile economy, leaders face unprecedented external pressures—from supply chain disruptions to shifting trade policies— and such stress can take its toll in unexpected ways. Recognizing and nurturing non-monetary needs can prevent boards from simply “throwing money at the problem” when compensation discussion becomes contentious.
In part one of the three-part series “Beyond the Paycheck,” we explore how effective boards recognize that executive fulfillment stems from a value proposition that goes beyond compensation. While this article focuses on the C-Suite, the advice can also inform conversations with leadership across the company.
The Hidden Drivers of Compensation Conversations
When compensation discussions grow heated, it sometimes masks deeper needs than a dollar amount. CEOs, after all, are generally paid handsomely. These needs can include:
- “Am I valued?” (Recognition & Respect). Leaders who navigate crises, make personal sacrifices or have mission-critical expertise hunger for acknowledgment, especially after periods of difficulty. Boards can implement regular recognition practices to prevent compensation from becoming the only channel for validation.
- “Am I winning?” (Status & Competition). Many executives instinctively measure against peers, and some CEOs run in insular circles and pay close attention to pay disclosures. Transparent performance frameworks and creative status markers are effective levers.
- “Am I secure?” (Validation & Role Clarity). Some leaders value signals that leadership still has confidence in their direction and vision. Regular performance reviews and open feedback channels may keep such executives feeling validated.
- “Will I be remembered?” (Reputation & Legacy). Prestige-driven CEOs may be thinking ahead to life after the C-Suite, valuing governance experience and prestigious associations that build their directorship portfolio. Some want something as simple as seeing a tangible symbol of their legacy, such as a photo on the wall somewhere, whereas others might want to be involved in succession planning.
- “Is this sustainable?” (Work-Life Balance & Wellbeing). It is only natural to ask if the job’s often punishing demands are compatible with a CEO’s health, relationships and long-term happiness. A well-respected mentor, especially a former CEO, can offer mutual respect and empathy for the job. This person can play point at delivering tough messages because often, they’ve been in the CEO’s shoes.
Circumstances Matter: Variables That Complicate Discussions
Extenuating circumstances can further complicate compensation discussions in unexpected ways. This may, in turn, require the board to lean even more on the tools outlined above to ensure an executive’s non-cash EVP remains strong.
- Agent/Owner Tension. In family-owned organizations or companies with consolidated ownership, executives who don’t share equally in the financial upside often experience heightened sensitivity about their relative value. It may help to designate a respected voice on the board who can act as a “translator” between the two sides, ensuring value is effectively communicated.
- Review Cycle Gaps. Private companies or startups with infrequent formal compensation discussions leave executives wondering, “How does the board really feel?” This intensifies pressure when more infrequent reviews finally occur, highlighting the importance of establishing regular feedback sessions, even if they are informal.
- Effort/Outcome Mismatch. When external factors create poor financial results, executives value outspoken recognition of their position with the board. Clearly communicating the rationale behind pay programs, especially when they do not reach targets, prevents surprises or misunderstandings and supports executives caught in the dual role of both participant and leader.
- Peer Transitions. Colleagues experiencing promotions, liquidity events or public recognition may trigger CEOs to compare themselves against their peers. Boards can endeavor to stay abreast of the broader compensation landscape to ensure their compensation programs remain competitive and before they become a point of contention.
- Board Composition Changes. New directors bring different expectations and evaluation frameworks, requiring executives to re-prove their worth. CEOs may value a “point person,” or an external sounding board (such as a networking group or an external coach) to offer a stable assessment of their performance.
- Milestone and Contract Expectations. As executives approach significant tenure markers, they naturally review their achievements against expectations, especially those who negotiated a large new hire grant or any type of one-off grant in the past. Again, regular feedback practices can help take some of the pressure off these “bigger talks.”
Conclusion: Money Can’t Buy Executive Satisfaction
Sometimes, it really is just about the money. But boards should not reflexively throw money at a problem before exploring other solutions. Ultimately, if the job doesn’t feel worth doing, then no paycheck—no matter how large—will make it so.
However, pay philosophies can sometimes balloon even with the best intentions. In part two of this series, we’ll examine how to diagnose so-called “runaway pay” scenarios, how to avoid them, and how to mitigate the damage once they become apparent.
