Make-Whole Packages: What It Actually Costs to Buy Out a Candidate's Forfeited Equity
Mathijs Bronsdijk5 min read
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Golden handcuffs tells you what a candidate stands to lose by leaving: their employer’s own proxy filing states the unvested equity, dollar for dollar. It stops there deliberately. Sizing the hole and filling it are two different questions.
The second question, what does it actually cost to buy that candidate out, has a real, filed answer too. Companies that hire away a public-company executive increasingly disclose exactly what they paid to make that executive whole, and the pattern across those disclosures is the closest thing to a market rate this niche has.
What “make-whole” means in a filing
A make-whole grant is compensation a new employer gives an executive specifically to replace value forfeited by leaving their old one before it vested. It’s distinct from a normal sign-on bonus or the executive’s regular annual equity grant, and companies have started saying so explicitly, in their own words, in the filing.
The same primary-source discipline behind every comp read in a Market Map.
Start your free monthThat distinction matters to a search firm building a competitive offer. A generic “senior executives typically get a large sign-on grant” is a guess. A filing that names a specific make-whole amount, tied to a named executive leaving a named employer, is a comparable.
A worked example: PayPal’s $20 million make-whole grant
PayPal Holdings filed an 8-K on February 3, 2026 announcing that Enrique Lores, formerly Chair and CEO of HP Inc., would become PayPal’s President and CEO effective March 1, 2026. The filing states the make-whole component in plain language: an award “intended to compensate him for equity awards of his former employer that he is expected to forfeit.”
| Grant | Grant-date value | What it’s for |
|---|---|---|
| Make-whole RSUs | $20,000,000 | Explicitly named to offset forfeited HP equity, vests one-third per year over three years |
| Annual RSUs, 2026 | $16,500,000 | Standard annual grant, same terms as other senior PayPal executives |
| Annual PSUs, 2026 | $16,500,000 (target) | Standard annual performance grant |
| Portion of 2027 annual RSUs | $11,000,000 | One-third of his expected 2027 annual grant, pulled forward |
| One-time Stock Price PSUs | $25,000,000 (target) | Vests on stock-price hurdles measured 3 to 5 years out |
Source: PayPal Holdings, Inc., Form 8-K filed February 3, 2026 (Item 5.02) and its Exhibit 10.1 offer letter to Enrique Lores.
The $20 million make-whole RSU line is the number that answers “what does a real buyout cost.” The other four grants are PayPal’s standard package for a CEO of Lores’s seniority, and the filing keeps them separate for exactly this reason: so a reader (or a comp committee, or a search firm) can tell what’s ordinary pay and what’s the price of the forfeiture.
How common this actually is, and what it costs on average
One filing is a data point. Glass Lewis’s own research on the 2025 proxy season, covering 204 CEO transitions at U.S. companies, shows it’s now a pattern, not an outlier.
Among S&P 500 companies, 53% of sign-on awards in 2025 cited make-whole considerations, up from 39% in 2024 and 45% in 2023. Those make-whole sign-on awards averaged $4.6 million, against $3.5 million for all S&P 500 sign-on awards generally.
Put together, Glass Lewis found 70% of the total value of all S&P 500 sign-on awards in 2025 was intended, at least in part, to offset a prior employer’s forfeited compensation.
That’s the honest baseline for a pitch: a majority of large-company sign-on packages today are, in real dollar terms, mostly a buyout.
See the same comparable-filing method built on your own candidate's target company.
Start your free monthBuilding a comparable range for your own candidate
A single national average doesn’t price one specific candidate. The method that does is the same one talent mapping uses for tracking moves: read several real filings as a pattern, not one number in isolation.
Where to look
Search EDGAR’s full-text search for 8-K filings under Item 5.02 that include “make-whole” or “forfeited,” filtered to companies and role levels comparable to your search. The offer-letter exhibit, not just the 8-K body, usually carries the grant-by-grant breakdown.
What to compare
Match on seniority (CEO to CEO, not CEO to divisional VP) and company size, the same discipline the comp-benchmarking method already applies to base and bonus. A $20 million make-whole grant at a large-cap public company says little about what a $200 million private company should offer; the Glass Lewis averages above are S&P 500 figures specifically, not a market-wide number.
What a make-whole number can’t tell you
It’s a range, not a formula. Boards have real discretion over structure (cash now versus multi-year equity), vesting length, and total size, and two companies making a comparably senior hire can land in very different places.
Golden handcuffs already establishes the size of what a candidate is forfeiting, from their own filed equity table. A comparable make-whole filing tells you what peers have actually paid to cover a forfeiture of that size, a realistic starting range for the negotiation, not a number a client should expect to match exactly.
Walking into that conversation with both numbers, what the candidate stands to lose and what comparable companies have actually paid to replace it, is the sized evidence that wins a mandate in the first place, not a guess dressed up as a benchmark.
Start your free month: the comp read for your next mandate, including a realistic make-whole range built from real comparable filings, on your own brief within 24 hours.
Sources
- PayPal Holdings, Inc., Form 8-K, filed February 3, 2026 (Item 5.02, appointment of President and Chief Executive Officer).
- PayPal Holdings, Inc., Exhibit 10.1, offer letter to Enrique Lores.
- Glass Lewis, "Make Whole Awards, Retention Grants, and the Rising Costs of Executive Recruitment", 2025 proxy season research.
- U.S. Securities and Exchange Commission, EDGAR full-text filing search.
Frequently asked questions
What is a make-whole package in executive compensation?
A grant, usually equity, a new employer gives an executive specifically to replace value being forfeited by leaving their current employer before it vests. Companies increasingly disclose it as its own line item, separate from a normal sign-on or annual grant, so investors can see the award is offsetting a loss rather than just paying a premium to win the hire.
How do you find real make-whole package examples?
Search SEC EDGAR's full-text search for 8-K filings under Item 5.02 (executive appointments) that include "make-whole" or "forfeited" in an attached offer letter or employment agreement exhibit. Public companies increasingly name the make-whole grant as its own line item with its own filed dollar value.
How common are make-whole awards?
Increasingly common at the top end. Glass Lewis's research on the 2025 proxy season found 53% of S&P 500 companies' sign-on awards cited make-whole considerations, up from 39% in 2024 and 45% in 2023, averaging $4.6 million per award.
Does a make-whole grant have to match what the candidate is forfeiting exactly?
No, and filings don't require it to. It's sized to approximate the forfeited value, but a board has discretion over structure (cash versus equity), vesting, and total size. A comparable filing gives you a realistic range to negotiate around, not an exact number to match.