IPO

The Founder Trap of Stagnant Equity Many boards operate under the dangerous assumption that a founder’s original equity stake provides sufficient lifelong motivation. This logic fails the moment market volatility strikes. When a company’s valuation craters—like the 92% drop experienced by some public tech firms in 2022—the original equity no longer serves as a performance driver; it becomes a psychological anchor. High-performing founders have options. They can walk away and start a fourth or fifth venture. To keep a visionary locked in on a turnaround, you must re-incentivize the mission with fresh, performance-based upside. Aligning Greed with Shareholder Recovery Compensation should never be a gift; it is a tool for alignment. Requesting a new compensation package at the bottom of a market cycle isn't about greed—it’s about signaling commitment. By setting aggressive stock price thresholds, such as requiring the stock to triple or quadruple before any payout triggers, a CEO binds their personal wealth to the recovery of every other investor. This structure transforms a defensive struggle into an offensive pursuit of high-stakes milestones. Preventing the Visionary Drift Founders are naturally wired to chase the next big thing. Without a clear path to significant new wealth, a CEO at a struggling firm might mentally drift toward other projects or early retirement. You want your leadership focused on the grueling task of a turnaround, not daydreaming about their next startup. Re-upping the stakes ensures the CEO stays hungry, maintaining the same "day one" intensity that built the company in the first place. Rewarding the Risk Taker Challenging the status quo requires a mindset shift from the board and investors. If we expect founders to take outsized risks, we must offer outsized rewards. Flawed logic suggests that once a company is public, the "founder's pay" ends. On the contrary, the public stage is where the stakes are highest and the distractions are loudest. A structured, tiered compensation plan that targets a return to IPO prices creates a win-win scenario that protects the long-term health of the enterprise.