Are You Rewarding the Right Employees with Equity?

Equity awards have become one of the most popular tools for attracting and retaining talent. They create ownership, align employees with the organization's long-term success, and can generate significant wealth over time.
But here's the question many organizations aren't asking:
Are you giving equity to the employees who actually value it?
Far too often, companies apply a one-size-fits-all philosophy to long-term incentives. The result? They spend millions on equity programs that don't influence the employees they are trying to retain.
Different Employees Value Different RewardsCompensation is not just about how much you pay—it's about how employees perceive value.
For many early-career professionals, life looks very different than it does for someone who is twenty years into their career.
They are often focused on:

• Saving for a down payment on a home
• Paying off student loans
• Buying a reliable vehicle
• Getting married or starting a family
• Building an emergency fund

For these employees, cash today frequently outweighs the promise of equity tomorrow.
Contrast that with more experienced employees.
Many senior professionals have already reached these financial milestones. Their priorities often shift toward:

• Building long-term wealth
• Retirement planning
• Tax-efficient compensation
• Sharing in company growth
• Leaving a financial legacy

For this group, equity can be a powerful retention and wealth-building tool.
The same reward simply carries different value depending on where an employee is in their career and financial journey.
Market Data Supports This RealityCompensation surveys consistently show that long-term incentives are generally not a market expectation for many early-career positions.
Instead, organizations remain competitive through:

• Base salary
• Annual incentives
• Benefits
• Career development
• Flexible work arrangements

Long-term incentives become increasingly prevalent as organizations move into leadership, highly specialized technical roles, and positions with significant influence over organizational performance.
That's why market pricing is so important.
Rather than assuming every employee should receive equity, let market data guide where long-term incentives create the greatest return on investment.
A Client's Wake-Up CallI recently worked with an organization that couldn't understand why several early-career employees were resigning despite having nearly $200,000 in unvested equity.
Leadership assumed employees would never walk away from that amount of money.
Yet they did.
Repeatedly.
When we looked deeper, the answer became obvious.
The company paid salaries and annual bonuses toward the lower end of the market while placing significant emphasis on long-term equity awards.
Meanwhile, competitors were offering approximately $25,000 more in base salary.
From the employer's perspective, employees were forfeiting $200,000.
From the employee's perspective, they were gaining something far more valuable.
An immediate $25,000 increase in guaranteed annual income.
Over four years, that higher salary alone would equal approximately $100,000 in additional earnings—and that's before considering higher annual merit increases, larger bonus opportunities tied to the increased salary, retirement contributions based on pay, overtime opportunities (where applicable), and the ability to invest or save those dollars immediately.
More importantly, that salary increase was certain.
The equity wasn't.
The stock price could rise—or it could fall. Vesting required the employee to stay for four years, and future value depended on market performance that no one could predict.
Employees weren't walking away from $200,000 in cash.
They were walking away from the possibility of future value in exchange for real dollars they could use today.
Don't Confuse Cost with ValueOrganizations often focus on what an equity award costs the company.
Employees focus on what it means to them personally.
Those are two very different calculations.
A $50,000 restricted stock award may cost the organization $50,000.
But if the employee is struggling to qualify for a mortgage, pay childcare expenses, or manage rising living costs, that award may not carry nearly the same perceived value as an increase in base salary.
Effective compensation programs recognize this difference.
Build Compensation Around Your WorkforceThis doesn't mean equity isn't valuable.
It absolutely is.
But it should be deployed strategically—not universally.
Ask yourself:

• Which roles truly influence long-term organizational value?
• Where does market data indicate long-term incentives are expected?
• Which employee populations are most likely to value equity over immediate cash?
• Are we underinvesting in base salary while overinvesting in equity?

​The answers may surprise you.
The Bottom LineThe most effective compensation programs recognize that employees value rewards differently throughout their careers.
Equity remains one of the strongest tools available for retaining leadership and rewarding long-term organizational impact. But for many earlier-career employees, competitive base pay and meaningful annual incentives often have a much greater influence on attraction and retention.
Before expanding your equity program, let market data guide your decisions.
The goal isn't to give every employee the same reward.
The goal is to provide the right reward to the right employee at the right point in their career.
That's how compensation becomes both competitive and meaningful.