Tech Executive Compensation Benchmarks Australia – How to Structure ESOP/LI
To help us better understand tech executive compensation benchmarks in Australia, we will need an example. A board has just made an offer to a brilliant CTO; the candidate has verbally accepted, and then someone in finance reads the detail on the option grant and realises it’s going to land the executive with a tax bill before they’ve sold a single share. Deal nearly dead. All because the equity wasn’t structured properly at the start.
That’s the thing about executive equity in Australia and New Zealand — it’s not a bolt-on to the offer letter, it is the offer letter. Base salary is important. Equity is what actually convinces someone to leave a comfortable enterprise job for the chaos of a Series B. And if you get the structure wrong, you can do real damage — either to the executive’s personal tax position, or to your own cap table, depending on which way you fall.
Let’s get into how to structure executive equity packages (ESOP/LTI) aligned to the tech executive compensation benchmarks Australia sees.
1. The Tax Question Comes First
Most of the arguments I see in this space aren’t really about equity at all. They’re about tax. Get the tax treatment wrong under the ATO’s Division 83A rules, and every other clever thing you’ve done with vesting or acceleration is irrelevant.
There’s a fork in the road here, and which side you’re on depends almost entirely on your company’s age, turnover, and listing status.
Does your company qualify for the ATO ESS startup concession?
YES |
NO |
| Unlisted, <10 years old, <$50m turnover, individual holding capped at 10% | Public, mature, or exceeds the $50m turnover / 10-year threshold |
| No tax at grant or exercise. Gains taxed later under CGT (50% discount if held 12mo+) | Tax deferred to exercise or conversion, then taxed as ordinary income |
Option A
The startup concession. If you qualify, this is genuinely one of the better deals going for executives anywhere in the world. Zero tax at grant, zero tax at exercise. The executive only pays tax when they actually sell shares, and if they’ve held them for more than 12 months, they get Australia’s CGT discount on top. The catch — and it trips people up constantly — is that the strike price must be at or above fair market value on the grant date. Companies love to lowball this using the ATO’s net tangible asset safe harbour method, and sometimes that’s legitimate. Sometimes it’s wishful thinking dressed up as a valuation. Get an actual valuation done properly. It’s cheaper than an ATO dispute.
Option B
Everything else. Once you’re over $50 million in turnover or past your tenth birthday, the concession is off the table, and you’re into deferred taxing territory. This is where performance rights and zero exercise price options (ZEPOs) earn their keep — tax gets deferred until vesting or exercise, at which point it’s taxed as ordinary income unless you’ve built in specific restrictions. Loan-funded share plans show up a lot in private-equity-backed businesses too, where the executive effectively borrows to buy shares at market value upfront and gets CGT treatment on exit. It works, but it’s not simple, and I wouldn’t try to run one without a specialist tax adviser in the room.
2. Options Or Performance Rights — Pick Based On Stage, Not Preference
There’s an assumption floating around that performance rights are always “better” because there’s no strike price. Don’t take this as a blanket rule. It depends entirely on where your company sits.
Instrument |
Mechanism |
Best Fit |
Why Executives Like It |
| Share Options (FMV) | Buy shares later at today’s fixed strike price | Seed to Series B | Enormous upside if the valuation runs |
| Performance Rights (ZEPOs) | Receive shares free once milestones are hit | Series C through Pre-IPO | Value even if the share price goes sideways |
Early on, options win, they cost you less pool per executive and the leverage is real if the company scales. But by the time you’re a Series C business with a strike price that’s climbed alongside your valuation, options stop being persuasive to incoming executives. Nobody wants to write a large personal cheque to exercise options in a company that might still fold. That’s when performance rights start doing the heavy lifting.
3. Tech Executive Compensation Benchmarks Australia Pays
These are tech executive compensation benchmarks Australia sees across the tech and enterprise market for non-founder executive hires. Take them as a compass; role scope, competing offers, and how badly the board wants this particular person will move the needle.
Role |
Seed |
Series A |
Series B |
Series C / Scaleup |
| CEO (non-founder) | 5.0% – 8.0%+ | 3.0% – 5.0% | 1.5% – 3.0% | 0.8% – 1.5% |
| CTO | 2.0% – 4.0% | 1.2% – 2.0% | 0.6% – 1.2% | 0.3% – 0.6% |
| CRO / VP Sales | 1.5% – 3.0% | 1.0% – 1.8% | 0.5% – 1.0% | 0.25% – 0.5% |
| CFO / COO | 1.0% – 2.0% | 0.6% – 1.2% | 0.3% – 0.7% | 0.15% – 0.35% |
| VP Engineering / VP Product | 0.8% – 1.5% | 0.4% – 0.8% | 0.2% – 0.5% | 0.10% – 0.25% |
If your Series B CTO offer is sitting near the bottom of that band, don’t be surprised when you lose them to a competing offer that isn’t.
4. Vesting — Protect The Company, But Don’t Be Stingy
The standard structure hasn’t changed much in a decade, and there’s no strong reason to reinvent it.
Grant date → [ 1-year cliff, 25% vests ] → [ monthly vesting, months 13–48 ] → fully vested
A year of nothing, then 25% all at once, then the remaining 75% trickles out monthly for the next three years. Standard. Fine. What I’d push boards on is the performance overlay for commercial roles. If you’re hiring a CRO, I’d want a meaningful chunk of that equity — half, in a lot of the deals I see — tied to actual revenue milestones, not just showing up for four years. Scaling ARR from $5M to $15M, hitting a regional expansion target in Singapore — whatever matters to your specific growth story.
And write your good leaver / bad leaver provisions with real precision. Fraud or gross misconduct — everything’s forfeited, vested or not. Redundancy or genuine ill health — unvested equity goes, but the executive keeps a window, usually 90 days, to exercise what’s already vested. Vague language here causes more disputes than almost anything else in the agreement.
5. The Two Clauses Candidates Always Ask About
Every experienced executive I’ve placed asks about these two things, without fail.
Acceleration on Change of Control
Single-trigger — where all unvested equity vests the moment the company is acquired — sounds generous, but acquirers hate it and it rarely survives negotiation in practice. Double-trigger is the real standard: acceleration only kicks in if the acquisition happens and the executive is let go or materially demoted within 12 months. It protects the executive from being pushed out right after the deal closes without rewarding a founder who cashes out.
Secondary Liquidity
If your path to IPO or acquisition is genuinely years away, giving executives some ability to sell a portion of vested shares during later funding rounds keeps morale intact. Paper wealth stops motivating people after about the third year of being told: “it’s coming.”
Equity Gets You In The Room. It Doesn’t Do The Hiring for You.
Tech executive compensation benchmarks in Australia command a well-structured, tax-efficient equity package — I don’t think that’s controversial anymore in the ANZ market. But it’s only part of it. You still need to find the executive worth structuring it for, vet them properly, and negotiate the package in a way that reflects current regional benchmarks rather than what worked three years ago.
That’s usually where I come in.
Need more insights to maximize compensation benchmarks for your Australian executive hiring? Reach out.
