Compensation Bands & Pay-Equity Plan

Executive Summary & Compensation Philosophy

Brightwater Analytics tripled headcount to 140 in two years with pay set deal-by-deal — and it shows: recent engineering hires now sit within ~3% of tenured peers, a tenured engineer has raised a gender-pay concern, and Series B diligence is ~9 months out. This plan installs a defensible salary structure, quantifies and closes the exposure, and gets Brightwater pay-transparency–ready before the raise.

The three moves

• Install an 8-grade banded structure mapped to market — so every offer, raise, and promotion has a rule.
• Fix the floor and the compression — lift the 17 employees below their band minimum and relieve Engineering IC3 compression.
• Close the flagged pay-equity gaps under privilege, starting with the statistically significant Engineering IC3 gap.

Expected outcomes

• ~85% → 95%+ of employees within their pay band within one cycle.
• Engineering IC3 unexplained gender gap closed from −4.1% to within ±1% (non-significant).
• 17 below-minimum employees brought to range minimum; 4 red-circle cases frozen with lump-sums.
• Posting-ready for NYC/CA pay-transparency before Series B diligence.

Figures are modeled from the 140-person base-pay file provided; validate against final payroll before adjustments are made.

Market Benchmarking

Method. Brightwater has no survey subscription, so we triangulate base-pay market data from Pave and levels.fyi reference points, aged to a common June-2026 date and geo-adjusted to an Austin-anchored blend (NYC/CA roles carry a +8–15% differential, applied at placement). Roles are mapped to survey jobs by family and level; equity is benchmarked separately and not shown here.

Targets above set each grade's midpoint in Section 3. Sales is benchmarked on base with a 50/50 OTE split; total cash is reviewed separately.

Job Architecture & Salary Band Structure

Job architecture

Two ladders, common levels: Individual Contributor (IC1–IC5) and Manager (M1–M3). Leveling is by scope and autonomy — IC2 executes defined work, IC3 owns features/accounts independently, IC4 sets technical/functional direction, IC5/M2+ owns outcomes across a team. Functions map onto the same eight grades.

Salary bands (base, USD; Austin-anchored midpoints, geo-adjusted at placement)

Placement & offer rules

• Slot current employees to grade by role/level, then to a compa-ratio reflecting sustained performance & tenure.
• New-hire offers target 85–95% compa-ratio (low-to-mid band), reserving the upper third for proven performers — this is what prevents the compression Brightwater created.
• Geo-adjust the band (not the grade) for NYC/CA hires at the differentials above.

Current-State Pay Analysis

Compa-ratio = current base ÷ band midpoint. Range penetration = position within min→max. Below is the distribution of all 140 employees against the new bands.

Cost to bring the 17 below-minimum employees to range minimum: ~$142K/year (concentrated in Customer Success and G&A). This is non-discretionary once bands are adopted — an employee paid below their own posted minimum is an immediate flight and credibility risk.

Pay-Equity Audit

Method. Within each job-and-level cohort, compare base pay for comparable work, controlling for the legitimate factors on file — level, tenure, location, and (where available) performance — and test whether a residual gap by gender is statistically significant. Cohorts under ~8 are reported as directional only.

Data gap: Brightwater holds gender for ~95% of staff but no race/ethnicity data, so this audit covers gender only. Recommend a voluntary self-ID campaign (counsel-reviewed) to enable a race/ethnicity analysis before the next cycle. Gaps shown already control for level, tenure, and location.

Remediation & Range-Placement Plan

Total reconciles to the Executive Summary: ~$310K annualized — about $198K immediate (equity + below-minimum) and $112K at the next merit cycle (compression). That is ~1.6% of an estimated ~$19M base payroll — affordable, and far cheaper than a diligence finding or a claim.

Go-forward rules

• New hires: offer at 85–95% compa-ratio; above midpoint requires VP + CHRO sign-off.
• Promotions: +10–12% or to the new grade minimum, whichever is greater.
• Merit matrix: increase % is a function of performance × compa-ratio (lower compa-ratio earns more), so the structure self-corrects over time.
• Red-circle: freeze base; deliver any award as a one-time lump sum until the range catches up.

Governance, Pay Transparency & Communication

Governance

• Annual comp cycle (one focal review); bands refreshed annually against market, off-cycle only for equity/retention.
• Approval thresholds: offers/raises within band → manager + HR; above midpoint or out-of-cycle → VP + CHRO; exec/equity → comp committee.

Pay transparency (confirm specifics with counsel)

• NY & CA roles require pay ranges in job postings — the new bands make Brightwater posting-ready; publish the band range (geo-adjusted) on every req in those states.
• CA also requires pay-data reporting at 100+ employees — Brightwater is in scope; align the comp data model now.
• EU Pay Transparency Directive is not currently applicable (no EU employees).

Communication (sequence matters)

• Managers first: train on the philosophy, bands, and how to answer "what's my range" before employees hear anything.
• Then employees: share grade, band, and the philosophy — frame as fairness and clarity. Deliver remediation adjustments in the same conversation where they apply.
• Do not promise that everyone is "at market"; explain how compa-ratio and performance drive movement.

Success criteria (Day-90 / next-cycle)

• 95%+ of employees within band; 0 below minimum.
• Engineering IC3 unexplained gender gap within ±1% and non-significant; Product investigated.
• Pay ranges live on all NY/CA postings; CA pay-data model ready.
• Comp cycle, merit matrix, and approval thresholds operating.

QC Notes

Rubric Score