"structuring compensation as base / bonus could also alleviate this" <-- I am not convinced. If you knew that your bonus was a percentage of your salary, the o

"structuring compensation as base / bonus could also alleviate this" <-- I am not convinced. If you knew that your bonus was a percentage of your salary, the only way that it would motivate you is if your salary was low (or if your bonus was extremely large). And for developers, the bonus is generally in the 10-30% of base salary range. There really has to be a variable component depending on the firm profits that isn't capped at a percentage of salary. "though this is not as good as equity as there is still no real ownership incentive." <-- this was the largest complaint to the investment banks transforming from partnerships to corporations (in the former case, the partners were personally liable for losses)