Where should a technical ladder top out when directors sit two levels above it?

We took ours to director-equivalent and stopped there deliberately. 1,400 engineers, 11 at the top technical level, so under 1%.

The criterion that did the work was scope of decision: at that level the person sets technical direction that other teams have to follow, and we name the decisions in the nomination. Tenure is not mentioned anywhere in the wording.

Went all the way to VP-equivalent at a medical devices company in Germany. Honestly, the top level has had two occupants in six years. It still mattered, because the principals could see a ceiling above them rather than a wall. If your executives fear cost, show them the likely headcount at each new level; ours was 14, 3 and 1.

A caveat from the pay side. Equal level does not have to mean identical package. Our distinguished engineers share the director base range but have a different long-term incentive mix and no management bonus multiplier. We were open about that from the start, and it has not caused the resentment I expected.

I disagree slightly with keeping the numbers tiny by design. If you cap the top levels with a quota, engineers read it as a promotion that only opens when somebody leaves.

We have no cap, but nominations go to a panel of existing top-level engineers plus two executives, and they turn down about half.