How much of a compensation package should be at risk?
By Cindy Nicholls Smith · Published January 14, 2026
For senior operating leaders, fifteen to thirty percent at risk is typical and defensible. Above that, the variable portion should be tied to outcomes the leader genuinely controls, measured on a stated formula, and paid out predictably enough that candidates can plan against it.
Match risk to control
At-risk pay works when the leader can move the metric. Tying a property management director's bonus to a development pipeline they do not run produces resentment, not performance.
Predictability is part of the offer
Candidates discount discretionary bonuses heavily — often to zero when negotiating. A formula-based plan with a three-year payout history is worth materially more in a candidate's eyes than a larger discretionary target.
Longer-term instruments
Where ownership wants retention beyond a year, phantom equity, deferred bonus or a long-term incentive tied to portfolio value does the job better than raising the annual bonus target.