In executive search, the term “Total First-Year Cash Compensation” (TFYCC) is foundational — yet often misunderstood. It’s the number used to calculate your search fee in a retained engagement.
Here’s the clear definition:
TFYCC refers to the sum of an executive’s base salary and all expected or guaranteed cash bonuses within the first 12 months of employment.
This definition matters because your search fee — often 25–33% of this amount — is based on it. Understanding exactly what’s included (and what isn’t) protects both client and search partner from confusion or disagreement down the line.
✅ What’s Included in TFYCC?
These are the standard components that count toward Total First-Year Cash Compensation:
Base Salary
The executive’s fixed, annualized salary — the core of their cash compensation.Guaranteed Bonuses
This includes:Signing bonuses
Retention bonuses
Any pre-negotiated cash payment expected in the first year, regardless of performance.
Target Performance Bonus
Even if performance bonuses are not guaranteed, the on-target earnings (OTE) figure is included.
Why? Because this reflects the intended total cash value of the role from the company’s perspective — and the candidate’s.
❌ What’s Typically Excluded from TFYCC?
Just as important as what counts is what does not count:
Equity & Stock Options
Non-cash incentives like RSUs, stock grants, or options are excluded. Their value is speculative and doesn’t represent immediate cash compensation.Relocation & Expense Reimbursements
One-time moving reimbursements or executive perks are not compensation. They’re reimbursements and not factored into TFYCC.Benefits Contributions
Employer-paid healthcare, retirement match, or stipends (e.g., car or phone allowance) — unless directly paid in cash — are excluded from the calculation.
📊 A Simple Example
Let’s make it real:
Base Salary: $350,000
Signing Bonus: $50,000
Target Bonus (25% of base): $87,500
TFYCC = $350,000 + $50,000 + $87,500 = $487,500
If your retained fee is 30%, your total search fee would be based on that $487,500 figure.
🔗 Understanding the Bigger Picture
Defining TFYCC is a critical part of understanding the complete financial model of a search.
To see how this fits into the overall pricing and ROI of a partnership, read our full breakdown:
👉 The Retained Search Fee Structure Explained: A Guide to Pricing & ROI
