Are stock options or equity part of the recruitment retainer fee calculation?

No.
In standard retained search agreements, stock options, RSUs, and other forms of equity are not included in the “Total First-Year Cash Compensation” used to calculate the executive search fee. This is because retained fees are anchored to liquid, first-year cash earnings — not future potential or illiquid instruments.

Why Equity Is Excluded from Search Fee Calculations

There’s a sound financial rationale behind this practice, grounded in industry-wide norms and accounting principles. Here’s why equity doesn’t count toward the search fee:

• It’s Not Cash
  Retained search fees are based on guaranteed, cash compensation that the candidate will earn in the first 12 months — including base salary, sign-on bonuses, and non-discretionary bonuses. Equity, by contrast, is non-liquid and non-guaranteed.
• Unrealized and Variable Value
  The value of equity — especially in startups and privately held companies — is speculative. Options may be underwater, and RSUs depend on future company valuations. A fee based on equity would introduce volatility and misalignment of value.
• Long-Term Vesting Schedules
  Equity compensation typically vests over four years or more. Since most of that value is not realized within the first year, it falls outside the scope of what is considered “cash compensation for headhunter fee” purposes.

Are There Exceptions? Yes, Rarely.

In rare, early-stage startup scenarios where cash is minimal and equity is the dominant form of compensation, a different, negotiated fee structure may apply. In such cases, both client and search partner may agree on a hybrid or milestone-based model, but this is an exception, not the norm.

Equity Still Matters — Just Not for Fee Calculation

While equity isn’t part of the retained search fee calculation example, it plays a crucial role in the overall value proposition of the role.
A large equity stake can make a mid-level cash offer compelling — and it’s our job as your executive search partner to articulate that upside to candidates with the financial acumen to appreciate it.

We ensure equity is positioned not just as a perk, but as a strategic incentive, aligned with the company’s growth trajectory and the candidate’s long-term impact.

Learn More About Executive Search Fees

Still have questions about what’s included — and what isn’t?
Dive deeper into our complete breakdown:
👉 The Retained Search Fee Structure Explained: A Guide to Pricing & ROI

Tanya Gallardo

Managing Director, Executive Search & AI Talent Strategy

Tanya Gallardo is the Managing Director of Executive Search & AI Talent Strategy at JRG Partners, leading C-suite and Board engagements across key growth sectors including Technology, Financial Services, and Manufacturing.

With over 18 years of experience specializing in disruptive technology leadership, Tanya is recognized as a leading authority on talent architecture for future-focused executive roles, such as the Chief AI Officer (CAIO) and Chief Digital Officer (CDO). Her expertise lies in accurately assessing the cultural fit and technical depth required to ensure a high return on investment (ROI) for critical leadership appointments.

Prior to her role at JRG Partners, Tanya held senior roles directing global talent acquisition strategies at a major publicly-traded technology firm, advising on organizational design and succession planning for emerging executive functions. She is a recognized speaker and contributor to industry events, sharing data-driven insights on executive compensation, leadership development, and the measurable business impact of C-suite talent.

Connect with Tanya to discuss your executive search needs.