“We Need to Talk About My Equity…”: How Often Do PE CEOs Renegotiate Their Deals?
When a CEO signs up to lead a private equity (PE)-backed company, it often feels like the beginning of a high-stakes adventure. There’s the transformation agenda, the promise of rapid growth, and—of course—the lure of equity. But here’s the thing: the deal you sign on Day One is rarely the one you live with for long.
It’s surprisingly common for CEOs to renegotiate their compensation packages—particularly their equity. Sometimes it’s because performance exceeds expectations. Other times, it’s because the structure was unrealistic from the start. Occasionally, it’s just about fairness.
But how often does this really happen? And what drives it?
We looked into the data, the academic research, and the anecdotes to find out. What we discovered is that while renegotiations may not be publicly tracked or disclosed, behind closed doors, they’re a routine—and strategic—part of the private equity playbook.
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The CEO Equity Illusion
First, let’s acknowledge the setup. Most CEOs who join PE-owned businesses are presented with a compelling, but complex, compensation structure. It typically includes:
• A base salary (often lower than market rate),
• A performance-based cash bonus,
• And the real golden ticket: equity—often structured to vest only on a profitable exit.
The equity part is where things get interesting—and messy.
A 2023 Heidrick & Struggles survey found that nearly 40% of U.S. private equity CEOs received no equity at all. In the U.K., that number was even higher—46% (Heidrick & Struggles, 2023).
Those who do receive equity are usually handed a small slice—averaging 1.5% in the U.S. and 0.7% in the U.K., typically subject to performance hurdles and cliff vesting tied to an eventual exit.
So from the get-go, many CEOs are taking a leap of faith. And unsurprisingly, once the realities of the job (and the growth plan) set in, many start wondering whether that leap was worth it.
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The Quiet Frequency of Renegotiation
Although exact statistics are scarce—because these renegotiations are usually confidential—multiple studies and industry reports suggest they happen more often than you’d think.
A KPMG report on remuneration in PE-backed companies found that 72% of CEOs involved in primary PE deals later wanted to renegotiate their equity terms (KPMG, 2018). That’s not a typo—nearly three-quarters felt the initial deal wasn’t fair or aligned with the work required to deliver the value creation plan.
What’s more, only 30% of CEOs in secondary deals felt the need to renegotiate, suggesting that more experienced management teams—or those who’ve been through PE deals before—might structure better terms upfront.
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Why Renegotiations Happen
So, why do these renegotiations take place?
1. Misalignment at Entry
Many CEOs accept PE-backed roles under pressure: short timelines, limited due diligence, and FOMO (“fear of missing out”) can all lead to hasty decisions. Once the dust settles, the reality of the growth targets, internal politics, or capital structure can make the original equity deal look far less attractive.
2. Outperformance
Sometimes, CEOs simply crush it. They beat projections, reduce churn, land a major client, or execute a game-changing M&A strategy. And in those cases, they understandably want a piece of the upside they helped create.
Jamieson Corporate Finance emphasizes this in their advisory work, noting that CEOs should proactively plan for equity renegotiation—especially after achieving key milestones or triggering value events such as a recap (Jamieson, 2024).
3. Company Lifecycle Events
Renegotiations are also common around major company events:
• Recapitalizations (where the PE sponsor takes some cash off the table)
• Follow-on investments
• Strategy pivots or business model shifts
• Leadership transitions (e.g., new chair, CFO, or PE partner)
These are natural moments to reevaluate whether the current structure still fits the goals of the business—and the role the CEO plays in it.
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The Leverage Equation: When Can a CEO Renegotiate?
Let’s be honest—renegotiation is about leverage.
If a CEO is underperforming or facing internal challenges, their bargaining power is limited. But when a CEO is delivering results and has strong board relationships, renegotiating can be straightforward—even welcomed.
In fact, many PE sponsors recognize that failing to reward and retain high-performing leaders risks derailing the entire investment thesis. A CEO who feels shortchanged is unlikely to go above and beyond in the last mile toward exit.
Felix Global, in a guide for PE portfolio CEOs, outlines several strategies for successful renegotiation:
• Know your value and impact on the business.
• Benchmark your compensation against market data.
• Structure the renegotiation as a mutual alignment exercise—not a demand (Felix Global, 2023).
Done right, a renegotiation isn’t a conflict—it’s a conversation.
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The Legal and Timing Angle
It’s worth noting that timing and legal positioning matter. Jamieson Corporate Finance points out that renegotiations are usually timed to avoid shareholder scrutiny, especially in public-to-private deals. Typically, compensation terms are restructured after the transaction closes, rather than during the buyout process, to minimize legal risk and stakeholder friction.
This means CEOs need to plan ahead. If you’re hoping to renegotiate equity, it’s best done:
• After a successful quarter
• Before a new capital round
• During an upcoming board offsite or strategic reset
Timing, as always, is everything.
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A Note on Culture: UK vs. US Approaches
Interestingly, there’s a cultural dimension here too. In the U.S., it’s far more common for CEOs to renegotiate packages aggressively. In the U.K., there’s more reticence—perhaps due to cultural norms or legacy board structures.
The MM&K Private Equity Compensation report notes that U.K. compensation structures often lack transparency, and that equity arrangements are more conservative compared to U.S. counterparts (MM&K, 2025).
But that doesn’t mean renegotiation is off the table. It just requires a little more tact and preparation.
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Advice for CEOs: If You’re Thinking of Renegotiating
If you’re a CEO in a PE-backed company and wondering whether it’s time to revisit your deal, here’s a playbook:
1. Build the case with data: Show how you’ve outperformed benchmarks, delivered key results, or led the team through significant change.
2. Know the fund dynamics: Timing matters. Renegotiating during a fundraising period, or just before a liquidity event, gives you more leverage.
3. Keep it collaborative: Frame your ask as a win-win for retention and alignment, not just personal gain.
4. Use advisors if needed: Compensation consultants or board-aligned mentors can help shape the narrative.
5. Don’t wait too long: Once exit discussions begin, your leverage may shrink fast.
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Advice for PE Firms: Be Proactive, Not Reactive
From the PE side, it’s often better to invite the conversation early than be caught off guard. Proactively reviewing CEO equity alignment at each value creation milestone reduces the risk of misalignment—or worse, executive burnout or departure.
When the CEO wins, everyone wins. But they have to believe they’ll win.
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Final Thoughts: Renegotiation Is Strategy, Not Drama
There’s a tendency to view renegotiations as a sign of tension or dissatisfaction. But in private equity, they’re often just smart business.
The investment thesis changes. The company evolves. The performance bar gets higher. And so should the conversation about rewards.
In the end, equity is supposed to align interests. If it’s not doing that, it’s broken.
Whether you’re a CEO or a PE partner, the question isn’t whether renegotiations should happen—it’s whether you’re handling them wisely.
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Sources:
1. Heidrick & Struggles 2023 PE CEO Survey
2. KPMG Remuneration in PE-Backed Companies
3. Jamieson Corporate Finance – CEO Negotiation Timing