In 2025, VC-backed companies are operating under tighter timelines and heightened investor scrutiny. Liquidity events are rare, and investors expect faster results. That’s why Sequoia and Carta — through their expanded strategic partnership — came together to host a conversation about the state of compensation and benefits today. Sequoia, the premier total compensation and benefits advisory firm for investor-backed companies, now leverages Carta’s full private market dataset to deliver custom, real-time compensation benchmarks tailored to each company’s stage, industry, and funding environment.

In a recent conversation, Kyle Holm, vice president of compensation at Sequoia, and Josh Steinfeld, principal product strategist at Carta, shared what market conditions mean for executive pay — and how companies can adjust their strategies to meet the moment. Their insights offer both context and actionable advice for founders, CFOs, talent leaders, and investors.

Read on to see highlights from the conversation. (Or access the full conversation and insights).

What’s Shaping Executive Compensation Today

Executive pay strategies don’t exist in a vacuum. They’re being shaped by a changing market environment:

  • Limited exits and anxious investors: Even with notable IPOs like Figma, liquidity options are narrow, putting more pressure on leadership teams to deliver.
  • Shorter windows for success: Executives now have roughly three to five years to prove out company value before facing investor impatience.
  • Capital constraints: Tight runways are forcing companies to make tough choices around hiring, benefits, and equity.

“Companies are having to make challenging trade-offs when it comes to the talent they have to have and the talent they need to defer,” said Holm. “Cash and equity timelines are shaping how they think about pay and benefits.”

With the pressures noted above in mind, companies are rethinking how they attract and retain leadership. Here are some key trends:

  • Hiring is steady but flat. Early 2025 saw the lowest January hiring numbers in seven years, following a surge in 2021–22. Industries like gaming and education are contracting due in part to AI, while hardware and medical devices still need hands-on talent.
  • Equity as a retention tool is harder to manage. Without a clear liquidity path, equity awards carry more risk for executives. “The startup market and the broader market are starting to look the same,” said Steinfeld. “We’re seeing flatter org charts, with VP titles used less frequently at early stages.”
  • Salaries are rising again. Across roles, salaries climbed about 2% in 2024, returning to more typical annual increases of 3.5% to 4.5%. Executives saw modest gains, while VP equity dropped slightly. “Equity benchmarks essentially fell off a cliff during the labor market cooldown and are only slowly coming back,” Steinfeld noted.

Emerging Strategies for Executive Pay

To stay competitive, companies are exploring new strategies that reflect the realities of today’s market. These approaches are still evolving but signal where compensation is heading:

Performance-based equity: More late-stage private companies are considering tying equity to measurable milestones, but adoption remains low. Fewer than 10% of private companies are using this structure, but interest is growing as boards seek stronger alignment between pay and outcomes.

“Designing performance equity programs takes time and care, and many companies lack clear milestones,” said Holm. “But for those that do, it’s a way to ensure executives are rewarded for driving the metrics that matter most.”

Founder refresh: Founder equity refreshes are some of the most nuanced decisions a board can make. They are highly case-specific, balancing future contributions with dilution concerns. “Founder refreshes are the snowflakes of compensation design — no two are alike,” said Holm.

Rising AI pay: Demand for AI leaders is spiking. Private companies are paying more, with salaries up around 7% and equity up 25% over last year. Early-stage companies are feeling this most, competing against deep-pocketed tech giants and needing to be creative with offers.

Working With Your Board

All of these trends play out in the boardroom, where compensation and equity decisions are made. To manage those discussions effectively:

  • Own the calendar. Set the agenda for comp discussions and help board members prepare. Pre-meeting conversations go a long way toward alignment.
  • Bring fresh data. “Having conversations informed by data is invaluable,” said Steinfeld. “It’s exciting to bring these insights to startups, where historically decisions were based on anecdotes.”
  • Stay ahead of questions. Expect conversations about equity, burn rates, and key roles. “Your advisor should bring proactive guidance,” Holm added. “Relying on year-old data won’t cut it.”

Access a recording of the full conversation.

How Sequoia and Carta Can Help

To meet these challenges, companies need more than generic benchmarks. That’s where Sequoia and Carta combine forces. The partnership blends Carta’s private market data with Sequoia’s advisory expertise, giving companies:

  • Custom benchmarks: Peer group analysis specific to your industry, stage, and roles.
  • Equity clarity: Data-driven guidance for equity structures and burn rates.
  • Strategic programs: Tailored strategies to attract and retain top leaders

Ready to get started? Fill out a quick form to connect with an expert Sequoia advisor and learn how your company can benefit from a modern approach to comp advisory.

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