THE EQUITY CONVERSATION WE SHOULD ALL BE HAVING.
By Caroline Rothwell Gerstein, CMO and Brand Architect.
This article first ran in THE BOARD BRIEFING, our weekly LinkedIn newsletter for founders, leaders, and operators building in the new economy.
I took my first equity-only board advisor role six months ago. An AI-tech startup. No cash. Just equity. My initial reaction? “This better be worth it.”
Here’s what happened: minimal time commitment, opened doors to three new client contracts, introduced me to impressive founders and investors, and fundamentally shifted how I think about compensation.
(Note: Under NDA, so can’t share names or specifics—but the lessons are worth discussing.)
That experience made me realize: we are all still figuring this out. Fractionals, brands, board members—everyone’s navigating compensation structures in real-time, often without comparing notes or learning from each other’s wins and losses.
So let’s talk about it.
THE MARKET IS SHIFTING.
Fractional executive rates jumped from $176 to $213 per hour this year —a significant climb that reflects how much the market has matured. Monthly retainers are averaging close to $10K across roles. On the surface, it looks like we’ve arrived.
But here’s the question nobody’s asking: what happens when the market contracts
Economic uncertainty is real. Funding environments have tightened. The early-stage startups who’ve been our best clients are the most vulnerable when capital dries up. Fractionals who’ve built pure-cash models might find themselves squeezed when budgets contract. Meanwhile, those who’ve negotiated equity alongside cash have built in both downside protection and upside potential.
THE STORIES THAT MATTER.
Let me share what’s actually working in the market right now.
A SaaS startup brought on a fractional CTO with equity and milestone-based vesting. Six months later, they’d launched their MVP ahead of schedule and closed a major investment round . The equity component wasn’t just compensation—it was the reason the CTO stayed through the late nights and the inevitable pivots. They had skin in the game.
Another company used a hybrid approach, blending cash with equity that vested over four years. Two years in, they’d hit 300% revenue growth . The fractional executive didn’t just execute—they became a true partner because their success was tied to the company’s success.
These aren’t unicorn stories. These are real engagements with practical structures that created alignment between what the fractional needed and what the company could afford.
FOR BRANDS: WHY THIS MATTERS.
If you’re a founder or in-house executive reading this, here’s what you need to understand: offering equity to fractionals isn’t about being cheap. It’s about creating partnerships that actually work.
When equity arrangements align the executive’s success with the company’s growth , everything changes. Fractionals with equity think in quarters and years, not weeks and months. They make introductions to their network because your win is their win. They stay through the messy middle when most vendors would have moved on.
This is especially true in fashion and consumer brands where reputation and relationships drive everything. A fractional CMO with equity will leverage their personal brand to elevate yours in ways a pure-cash vendor simply won’t. They become ambassadors, not service providers.
WHAT I’VE LEARNED (AND LOST) ALONG THE WAY.
Years ago, I worked with a brand that eventually raised significant funding and exited. My compensation structure was straightforward: monthly cash retainer. Good money at the time. I felt fairly paid.
What I didn’t negotiate: any participation in the enterprise value I helped build. When they brought on a full-time executive after their raise, that person got equity. At exit, that equity was worth more than everything I’d made across multiple years of strategic work.
I learned the hard way that if you’re building value, you should participate in that value.
But that AI-tech board role taught me something equally important: equity-only deals can work brilliantly when the time commitment is minimal and the strategic value is high. Board advisory, key introductions, strategic positioning—these don’t necessarily need cash attached if the equity is meaningful and the company has a real path to exit.
It’s never been about cash versus equity. It’s about structuring the right mix for what you’re actually building together.
THE REAL QUESTIONS TO ASK.
For early-stage companies, equity stakes typically range from half a percent to one and a half percent, with milestone-based vesting that protects both sides. Hybrid models work best when you’re committing real hours—base cash keeps the lights on while equity captures upside.
Growth-stage companies offer smaller equity percentages but higher cash, which makes sense given their maturity. The key is understanding acceleration clauses—what happens if they get acquired before your equity fully vests?
Late-stage and PE-backed companies rarely offer straight equity to fractionals, but performance bonuses tied to exit multiples can be substantial. The structure matters less than the alignment.
And market conditions change everything. When funding flows freely, cash retainers climb. When capital tightens, equity becomes the currency of choice. The fractionals who can move fluidly between models survive market shifts.
WHAT WE SHOULD ALL BE DOING.
Start every compensation conversation with alignment, not rates. Ask: “How should we structure this so we’re both invested in the same outcome?” Not “what’s your budget” or “what do you charge.”
Have the equity conversation early, not at renewal. Understand the company’s cap table and whether there’s a realistic path to liquidity. Get everything documented—strike prices, vesting schedules, acceleration clauses. This isn’t the place to wing it.
For brands, remember that fractionals with equity behave fundamentally differently than vendors. That shift in behavior and commitment is worth the dilution, especially in relationship-driven industries where trust and reputation compound over time.
The fractional executive market has exploded to over half a million professionals, doubling in just two years. As this space matures, compensation structures will become more sophisticated, more varied, and hopefully, more equitable for everyone involved.
WHERE THIS GOES.
The future of fractional work isn’t just about flexibility and freedom. It’s about building equity—literal equity—in the companies we’re helping scale.
That AI-tech board role that started with just equity and a handshake? It’s become one of my most valuable professional relationships. Not because of what it paid, but because of what it opened up and who it connected me to.
Sometimes the best deals aren’t about maximizing cash today. They’re about structuring for the long game and betting on alignment over certainty.
Start having these conversations. Share what’s working. Learn from what isn’t.
Because we’re all figuring this out together.
THE BOARD sits uniquely at the intersection of Brand, Business, and Culture. 1:1 advisory, project-based experts, fractional leadership, and curated DREAM TEAMS help you move faster, smarter, and with far less risk. Let’s talk!
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