The Private Equity Dream: Do CEOs Actually Get the Equity Payouts They’re Promised?
When a CEO joins a private equity (PE)-owned business, the pitch is almost always the same: work hard, drive growth, hit the numbers — and walk away with a life-changing equity payout when the business sells.
But here’s the real question: How many CEOs actually walk away with the payout they were promised?
It’s a high-stakes issue, especially for seasoned executives brought in to turn around or scale PE-owned companies. A big chunk of their upside often hinges on performance-based equity — and more often than not, they're signing up for a very risky deal.
We dug into the data across the U.S. and U.K. over the past five years. The short version? Most private equity-backed CEOs don’t get the payout they imagined. In fact, many leave with little or nothing.
Let’s break it down.
Equity Grants: The Carrot Dangling at the End of the Stick
Let’s start with the promises.
In the U.S., the 2023 Heidrick & Struggles Private Equity-Backed CEO Survey found that 39% of U.S. PE-backed CEOs received no equity at all. For those who did, the average grant was just 1.5% of the company’s fully diluted equity (Heidrick & Struggles, 2023).
In the U.K., it’s even starker. The same survey reported that 46% of CEOs received no equity — and those who did received, on average, just 0.7% of the business. Less than half of what their U.S. counterparts are offered.
Right out of the gate, many CEOs are working for outcomes they have no real stake in. And even for those with equity, the stakes are smaller — and riskier — than they seem.
High Turnover: The Silent Killer of Equity Payouts
Even for CEOs who receive meaningful equity grants, staying in the seat long enough for it to vest — or for the company to exit — is the next major hurdle.
The PE world isn’t famous for patience. A widely cited Bain & Company study found that 58% of CEOs are replaced within two years of a PE deal closing. By the time the fund exits, over 70% have been replaced (Slayton Search, 2021).
An academic study from SSRN found similar results: 51% of CEOs in LBOs were replaced within two years (SSRN, CEO Turnover in LBOs).
And what happens to your equity if you leave early? In most cases, it vanishes. Vesting schedules are tough — often 4 or 5 years, and sometimes tied to hitting very specific (and ambitious) growth milestones.
Bottom line: even if the equity looked great on paper, many CEOs never see a dime.
The Role of Exit Conditions: Timing Is Everything
In private equity, equity payouts are almost always “event-based.” No sale, no payout. If an exit doesn’t happen — whether because of market conditions, regulatory hurdles, or poor performance — the equity structure collapses.
The 2025 Carta PE Executive Equity Report offers a useful lens: even when CEOs are granted an average of 2.6% equity(in corporations, not LLCs), the realization of that equity depends heavily on hitting performance milestones and the fund achieving an exit at the right time (Carta, 2025).
In other words: even with a decent stake, the stars have to align perfectly for CEOs to see the money.
Cross-Atlantic Comparison: U.K. CEOs Get the Shorter End of the Stick
While U.S. CEOs aren't exactly basking in riches, U.K.-based leaders are often in an even weaker position.
According to the MM&K Remuneration Trends Report (2025), U.K. compensation structures tend to be more conservative. There's less long-term equity upside, more focus on base salary and short-term bonuses, and an even narrower path to a significant payout (MM&K, 2025).
Combine that with similar — or even tougher — performance expectations, and U.K. CEOs are shouldering massive pressure for relatively modest rewards.
Why CEOs Need to Navigate Equity Discussions Carefully
The psychology behind CEO decisions is complicated.
The equity windfall is seductive, but so is the prestige of running a PE-backed company. Some leaders are driven by the thrill of turnaround work. Others are drawn to the idea of joining the investor class themselves.
But there’s also an asymmetry of information. Many CEOs don’t fully understand the fund's timeline, true business condition, or exit plan until months into the role — when they’re already locked in and battling aggressive growth targets.
Interestingly, CEOs who engage experienced advisors early to help navigate equity discussions often achieve better outcomes. Advisors can help benchmark equity grants, negotiate more realistic vesting terms, and push for partial payouts — advantages that can make a significant difference when the exit eventually comes.
Is There a Better Way to Structure CEO Incentives?
There’s growing momentum toward better models.
Some PE firms are experimenting with tiered vesting, where a portion of equity vests based on time served, and the remainder ties to performance goals. Others are offering synthetic equity or cash-based long-term incentives that deliver payouts even without a traditional exit.
The 2024 BDO Executive Compensation Survey showed a rise in private companies using performance-based cash bonuses and phantom equity to mitigate the risks of failed exits (BDO, 2024).
These approaches may offer more realistic upside while avoiding the “all or nothing” dynamic that often burns CEOs today.
What This Means for CEOs, PE Firms, and Boards
If you’re a CEO considering a PE-backed role:
Read the fine print.
Understand the vesting schedule, exit expectations, and downside risks.
Push for partial vesting and realistic performance hurdles.
Engage an experienced advisor to help negotiate your equity package.
If you’re on the PE side:
Reconsider your leadership model.
High CEO turnover is expensive and value-destructive.
Thoughtful equity structures and transparent communication attract and retain stronger leaders.
If you’re a board member, HR leader, or operating partner:
Challenge the status quo.
Equity can be a powerful motivator — but only if the promise feels achievable.
How Portobello Advisory Can Help
At Portobello Advisory, we specialize in coaching and advising private equity-backed CEOs.
We help leaders:
Understand the fine print in their equity agreements.
Benchmark their compensation structures.
Navigate negotiations with private equity investors.
Create leadership strategies that align incentives with long-term success.
Having a trusted advisor in your corner can mean the difference between missing out — and maximizing the value you deserve.
If you're considering a PE-backed role or negotiating a new equity package, let’s talk.
Visit Portobello Advisory to learn more.
Final Thought: Hope Isn’t a Strategy
The dream of a private equity windfall is alive and well. And yes, some CEOs do hit it big. But they are the exception, not the rule.
Across the U.S. and U.K., the reality is harsh: most PE-backed CEOs don’t receive the payouts they envisioned. High turnover, narrow vesting structures, and exit risks combine to leave many empty-handed.
Private equity thrives on hard metrics and accountability. It’s time to apply that same discipline to how we incentivize and reward the leaders driving the results.
Heidrick & Struggles 2023 Private Equity–Backed CEO Compensation Survey
This report provides insights into compensation trends for CEOs at private equity–backed firms around the world.
Read the full report
Slayton Search: CEO Turnover in Private Equity
An article discussing the high rates of CEO turnover in private equity–owned companies.
Read the articleSSRN: CEO Turnover in LBOs: The Role of Boards
An academic study examining CEO turnover in leveraged buyouts backed by private equity funds.
Access the studyCarta 2025 PE Executive Equity Report
A comprehensive report analyzing how equity compensation works within private equity–backed companies.
Explore the reportMM&K Remuneration Trends Report 2025
An analysis of pay trends, including salary adjustments and bonus payments, across the UK’s private equity and venture capital fund management industries.
Read the reportBDO 2024 Private Company Executive Compensation Survey
A survey analyzing pay—including salaries, bonuses, and long-term incentives—for executives in private companies.
View the survey