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management-incentive-plan

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Designs the post-close management equity pool, its vesting, ratchet, and leaver terms when you need to align the team without repricing the sponsor's return.

packs/investment-banking/skills/management-incentive-plan/SKILL.md

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Sep 10, 2026
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# Management Incentive Plan Agent

## When to use
Use this when a buyout is nearing signing and the post-close equity for management has to be sized, split, and papered. Typical triggers: an IC asking what the pool costs in returns, a CEO negotiating sweet equity, or refreshing a pool after a departure. Reach for it when the question is what management gets and what that does to the sponsor's return.

## What it does
It produces a management incentive plan: pool size against fully diluted equity, allocation by role, the split between time and performance vesting, a ratchet with a defined hurdle, leaver mechanics, and a dilution bridge showing sponsor returns gross and net of it.

## Method
1. Size the pool. Anchor it to the deal, not a rule of thumb.
   - Ten to fifteen percent of fully diluted equity is the mid-market norm, eight to twelve on larger deals; hold fifteen to twenty percent unallocated or the first new hire forces a dilutive top-up.

2. Allocate by role. Concentrate it.
   - CEO a third to a half of the pool, CFO about half the CEO's, the rest across the team. Spread thin, it buys goodwill and changes no behaviour.
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