A Case Study in Fixing Broken Long-Term Equity Incentives

When Long-Term Incentives Lose Their Signal: Fixing Broken Equity Incentives

Equity compensation is supposed to be a signal.

It signals what a company values, how it expects value to be created, and what kind of long-term commitment it is asking of its people. When that signal is clear and credible, equity can be a powerful alignment tool. When it isn’t, even well-intentioned plans can quietly drift into irrelevance or worse, create friction that undermines culture and trust.

This is not a story about a company that “outgrew” equity compensation. It’s a story about a company whose growth outpaced the assumptions embedded in its original incentive design, and what happens when leadership is willing to confront that mismatch directly.

True Talent Advisory (True) offers a useful case study.

Founded in 2012 with a small team and an ambitious vision, True has grown into a global platform with more than 700 employees across five continents. Its portfolio of businesses — spanning executive search, talent platforms, executive assessment, and technology — serves clients navigating some of the most complex talent decisions in the market.

From the beginning, True made a deliberate choice to share value broadly. Every employee, regardless of role or geography, participates in an equity-based compensation program. That philosophy, ownership as a cultural principle, not a perk, has remained constant.

What changed was the reality around how that ownership was structured.

When Equity Mechanics No Longer Match Reality

True’s original Key Employee Equity Plan (KEEP) was built around phantom equity, with vesting tied to a change in control. At the time, this structure aligned with how leadership expected value to be realized. It was straightforward, familiar, and avoided the tax complexity of direct ownership in a global organization.

Over time, however, cracks began to show.

By 2023, the phantom units held by many employees had accumulated meaningful value — but the path to realizing that value had become increasingly opaque. Employees could see that they were contributing to growth, but they couldn’t see how or when that contribution would translate into something tangible.

During internal assessments and stakeholder interviews, several concerns surfaced consistently:

• Uncertainty around vesting: Participants did not know if or when a liquidity event might occur, or whether their equity would ever materialize.
• Perceived lack of agency: Vesting tied to a transaction felt disconnected from day-to-day decisions and long-term effort.
• Limited transparency: Excel-based tracking provided little insight into award value, vesting progress, or how individual equity fit into the broader capital structure.
• Cultural dissonance: A plan anchored to an acquisition outcome conflicted with how employees experienced the company’s mission and values.

None of this reflected a failure of intent. It reflected a structural misalignment, one that many high-growth organizations eventually encounter when original assumptions no longer match lived reality.

The question wasn’t whether equity still mattered at True. It clearly did. The question was whether the design still reinforced the behaviors and outcomes the company actually wanted.

From Deferred Promises to Active Ownership

True’s response was not incremental. Rather than layering fixes onto an aging framework, the company undertook a comprehensive redesign through what became the KEEP Transformation Program.

The first phase addressed the most fundamental issue: equity that feels theoretical doesn’t function as equity.

Existing phantom units were frozen based on the company’s current equity valuation, preserving accrued economic value. For each phantom unit, participants received a corresponding profits interest. Economically, employees were not giving anything up. Structurally, however, everything changed.

Profits interests introduced two critical shifts:

1. Vesting was no longer contingent on a change in control. Instead, awards vested based on continued service, reinforcing the idea that ownership is earned through sustained contribution.
2. Participants gained true equity exposure. Once vested, employees held actual ownership interests, rather than contractual promises tied to a future event.

In most of the jurisdictions where True operates, this structure also delivered meaningful tax advantages, converting ordinary income into capital gains. While tax efficiency wasn’t the primary driver of the redesign, it materially improved the overall value proposition for participants.

Just as important as the change in award type was the change in transparency. True replaced spreadsheet tracking with a modern equity administration platform that provides real-time visibility into vested and unvested awards. Independent third-party valuations were introduced and shared with participants, allowing employees to understand not just that their equity had value, but how that value was being determined.

The result was a shift from abstract participation to informed ownership.

Designing for Different Contributions — Without Diluting the Philosophy

The second phase of the KEEP Transformation Program recognized a reality that many organizations struggle to address cleanly: not all roles contribute to value creation in the same way, and equity design should reflect that without creating hierarchies of worth.

True introduced the ability for select senior leaders to purchase capital interests outright. These interests were not subject to vesting — ownership was immediate, tangible, and fully aligned with risk and reward. This feature mirrored how ownership operates in many partnership-like environments, while remaining consistent with True’s broader philosophy of shared success.

At the same time, the company introduced annual refresh grants of profits interests for members of its operations leadership team, beginning in 2024. This ensured that long-term alignment wasn’t limited to a single moment in time, but reinforced through continued participation as roles and responsibilities evolved.

Looking ahead, True also announced plans to launch an internal equity market next year (2026), giving employees the ability to buy and sell interests among themselves. For a privately held company, this represents a meaningful expansion of optionality, providing potential liquidity without requiring an external transaction.

Taken together, these elements reflect a thoughtful balance: different tools for different constituencies, anchored by a consistent ownership philosophy.

What This Equity Program Redesign Gets Right

True’s experience highlights a lesson that applies far beyond any single industry or company profile: equity compensation only works when employees believe it reflects reality.

That belief is shaped by a few core factors:

• Clarity: Do participants understand what they hold and how it works?
• Credibility: Is the path to value creation believable and aligned with how the company actually operates?
• Control: Can employees influence outcomes through their actions?
• Consistency: Does the equity story match the cultural story being told every day?

When those elements fall out of alignment, equity becomes noise. When they reinforce one another, equity becomes a powerful organizing force.

Measuring Impact Without Overselling Results

True approached the KEEP Transformation Program with clear success metrics from the outset. Participation rates, vesting behavior, retention trends, internal rates of return, and direct employee feedback all serve as indicators of whether the program is functioning as intended.

Early results point to increased engagement, stronger understanding of equity value, and deeper alignment with long-term goals. But perhaps the most meaningful outcome has been qualitative: employees now talk about equity in terms of ownership and contribution, rather than speculation and uncertainty.

That shift doesn’t happen because of clever structuring alone. It happens when equity design reflects the truth of how value is created — and when leadership is willing to make that design legible.

A Broader Takeaway for Growing Companies

The KEEP Transformation Program was not about adding complexity for its own sake. It was about removing friction between intention and experience.

For organizations navigating rapid growth, evolving strategies, or changing assumptions about the future, True’s approach offers a clear reminder: equity plans are not set-and-forget instruments. They are living systems that need to evolve alongside the business they are meant to support.

When they do, equity stops being a distant promise and starts functioning as what it was always meant to be — a shared stake in something worth building.

To see how these design principles were applied in practice — including the tradeoffs, sequencing, and outcomes — you can view the True Talent Advisory case study by Infinite Equity.

For more resources for private companies, check out the Private Company Stock Plans section on NASPP.com