Compensation and incentives for founder led lower-middle market companies
This page is for founder led lower-middle market companies with 5 to 50 million in annual revenue. The goal is fair, simple, and competitive pay that supports growth and retention.
Questions and short answers
How do I set salary bands and stay competitive
Group roles into families and levels. Pick a market data source and a target percentile by role. Set a band width that allows growth inside the role without title inflation. Add location rules and a yearly review cadence. Share a short guide so managers use bands the same way.
Set salary bands that stay competitive
When should I add an employee share ownership plan
Add one when you want to retain and align key people over several years and when profit and reporting are stable. Choose between real equity, options, or a phantom plan. Keep grants tied to impact and vesting simple. Explain value in plain words and show expected outcomes.
Choose and launch an employee share ownership plan
What mix of base and variable pay fits sales and non sales roles
For new logo sales use on target earnings with a mix like sixty base and forty variable or fifty and fifty for shorter cycles. For account management tie variable to net revenue retention and on time collections. For non sales roles keep a smaller variable pool tied to company and team outcomes.
Pick the right pay mix
How do I design a bonus plan tied to EBITDA and cash
Set a simple gate so the plan pays only when EBITDA and cash meet targets. Fund a pool as a percent of EBITDA above the gate. Split awards across company, team, and individual outcomes. Pay most after year end and hold a small portion until cash from year end invoices is collected.
Design an EBITDA and cash bonus plan
Related links
/people-and-leadership
/finance-and-profitability
/sales-engine
Last updated: August 27, 2025
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