For instance, Marc Benioff of Salesforce took a salary of $1 at IPO, Patrick Shiong of Nant Health took no salary, Jack Dorsey at Square took only $3,750, and Jeff Bezos at Amazon took only $64,333. Executive compensation at large or public companies is an even more nuanced topic, on both sides of the table. Please quote the information above when referring to 2019 data. Indeed, it’s not unreasonable to take a performance-based bonus and it’s also expected that a founder will be granted stock as the Company matures and becomes more successful, especially if their salary is low. Visit www.kruzeconsulting.comto learn more. What rewards should you expect at the IPO stage? There are a lot of variables that might cause a … The best performing companies use incentive-based compensation to achieve their goals. The firm handles all things Accounting, Tax, Finance, & HR: interim CFO Consulting, financial modeling, annual taxes, venture debt consulting, 409A reporting, bookkeeping, AR/AP, and Seed/Series A/B Fundraising Preparation. And, not surprisingly, compensation is one of the most frequent questions. It’s actual market, and good investors have no problem rewarding CEOs that are performing. We can commit in 3 weeks and our check is $1mm. In the very early days, employees are often paid more than founders / senior executives. 3. Have a CEO who has three kids, then put aside some shares for the kids’ college education that are forfeitable if the CEO leaves — golden handcuffs again. Equity is the great compensation equalizer in startup companies—the bridge between an executive’s market value and the company’s cash constraints. Executive compensation is not only a consideration close to the pocket book of CFOs but also a topic of increasing importance to managements and boards. We link, at the individual executive-level, their salary, bonus, and equity holdings to firm-level information on financing, revenue, headcount, and product milestones. Depending on where you look, executive compensation at startups can vary wildly. Compensation for executive managers is different from compensation for other employees in most organizations. Email Sammy directly at sammy@blossomstreetventures.com. Which is to say it's unlikely that these people have the "executive lifestyle." An executive compensation plan must act as an incentive and retention device for startup executives while delivering a fair return to investors and shareholders who have funded the company. We found that the average startup CEO pay at funded startups is $130,000. Negotiating Compensation at a Startup Startup jobs -- where you’re given stock in a new company in exchange for working for a low or even no salary -- are like a gambling trip to Las Vegas. The fruits of your team’s labor are at hand. What an employee receives in equity, cash, and benefits depends on the role they’re filling, the sector they work in, where they and the company are located, and the possible value that specific individual may bring to the company. Let’s go straight to the bottom line, and then backtrack to the thinking. Analysis of CEO Cash and Equity Compensation in 2016 . The 2019 Executive Compensation and Benchmarking Survey Pearl Meyer has combined two industry-leading data sources to provide you with an in-depth review of both your competitive standing in comparison to your peers and the total cost of compensation for your leadership team. As financial and accounting consultants to hundreds of funded startups, we are regularly asked by our clients to help them benchmark their companies’ metrics. Explore by role, location, skill, or market. Kruze provides Startup CFO Consulting to over 200+ startups in Silicon Valley, Los Angeles, New York, and other major startup hubs. When the executive is also a founder, that also impacts compensation because they’ll likely be given more equity in the company rather than being directly compensated. There is a tradeoff between these. Example 1: A minority co-founder (say, 10%), who has not been paid any cash compensation (and is not an exempt salaried employee – see below), is not working out and is let go. And being a Cxx at a small, pre-series A startup is pretty meaningless in terms of the title. Other C-level execs would receive 1-5% equity that vests over time (usually 4 years). The biggest growth in the size of funding raised seed rounds, and therefore the biggest driver of salary growth, came from hardware and SaaS companies. When evaluating compensation, the manner in which you filter the data can change the story significantly. That said, these individuals were independently wealthy before the IPO, but it’s always refreshing to see a CEO pass up a big salary if he/she doesn’t need one. Granted, for the later stage companies it’s a different story – while these CEOs tend to make more, there are fewer female CEOs in this group. But do you know how your executive compensation package will change as a result of becoming an employee of a public company? Properly crafted, an executive compensation plan can help attract top-notch talent, retain best performing executives, motivate the leadership team to succeed and align their activities to help ensure the company’s goals are being reached. We are pleased to present the 2016 Executive Compensation Trend Report based on data collected from our 2016 VC Executive Compensation Survey. Make sure they are actually […] CEO salaries in the Biotech and Healthcare industries tend to average more than those in other industries. Expect us to publish future studies on other startup executive pay. The value of each depends on the stage of a company’s growth, the role , … ... while relying much less on investment capital and equity compensation. Compensation data is highly situational. Design by Lucila Romero. In 2018, CEOs of hardware startups had an average salary of $118,000, which rose 14% to $135,000 in 2019. To spotlight how that applies to CEOs at venture-backed companies, we partnered with compensation data firm J.Thelander Consulting to break down the data by gender, the amount of capital the company has raised, and whether or not the CEO founded the company. While increases in tech company wages have been well publicized, the increases in biotech are equally interesting and important for any company looking to attract and retain talent (as well as investors active in the industry). With the help of sponsoring venture firms, data was collected from 1568 private, venture-backed companies between mid-August and mid-September 2016. All of that being said, the early employees will of course expect their compensation to move closer to market as the startup raises funds and hits revenue milestones. The largest growth appeared among companies who raised between $5-10 million – among this group, average CEO salaries jumped 12% from $145,000 in 2018 to $162,000 in 2019. EXECUTIVE SCIENTIST/ARCHITECT 92 51% 49% VP QUALITY 15 7% 93% GENERAL MANAGER 130 12% 88% VP CONSULTING 40 5% 95% C-LEVEL OTHER 56 57% 43% OTHER VP 122 12% 88% . The data below shows the salaries of 101 tech company CEOs at IPO. There’s been plenty written about the pay disparity between women and men in the U.S. And when it comes to the startup world, that pay gap has remained stubbornly high. This Guide does not replace professional advice. They invest in companies with run rate revenue of $2mm+ and year over year growth of 50%+. Here's what entrepreneurs think they know about startup pay--and what actually happens. Be sure to temper your salary accordingly based on the stage of your company. Startup salary and equity data for thousands of startup jobs. We hope this data will help other early-stage businesses prepare their budgets! Kruze’s clients have raised over $500 million in venture capital in the past 12 months, and are market leading Saas, software, eCommerce, eHealth and FinTech startups. Founders in those industries tend to come with academic credentials, and previous experience, that founders in other industries don’t always have (M.D., PHD), and thus warrant a higher annual salary. We may monetize some of our links through affiliate advertising. While it’s not quite exploding, there’s a frenzy of activity in the startup world. Here are a couple of examples showing how things can go wrong. $276k Is the Median Startup CEO Salary for a Very Successful Company Keep in mind, the median salary of $276k is for the CEO of a company about to go public. Stop guessing. The startup you work for is gaining acceptance in the market and with remarkable growth, you are now eyeing the prospects of an IPO. A … If this co-founder feels aggrieved, he or she might sue the company and the other founders personally for failing to pay the minimum wage. Here’s a basic framework. These factors include: the total funding raised, cash in the bank, industry, and the experience of the founder. As software companies graduate from the startup to the expansion stage, their Boards of Directors need to start formalizing the setting of executive compensation. Sammy is a co-founder of Blossom Street Ventures. As major economies show signs of recovering from the 2008 recession, compensation can become more decisive to retaining and motivating critical senior executive … From time to time I get questions about startup compensation. Out of 8 employees at Senstone, 3 accepted equity for reduced cash… They span the “typical” range of U.S. startup industries including biotech, eCommerce, fintech, hardware, SaaS and more. Equity, not salary, should be your main focus. There is a tradeoff between these. Compensation data is highly situational. I’ve picked up quite a bit just by being around our CEO, Kyle, for the past few years — he’s been in and out and up and down in startups, and has shared some of the hard lessons he learned along the way. Non-Founder executive compensation? Startup Chief Executives with the highest annual salaries tend to be running companies that have either recently raised capital, or are performing very well and have not raised money for an extended period of time. Finden Sie Hohe Qualität Start Executive Entschädigung Hersteller Start Executive Entschädigung Lieferanten und Start Executive Entschädigung Produkte zum besten Preis auf Alibaba.com It's never easy, but there are guidelines for how to approach this process. There are extensive legal resources available on executive compensation. ... effective executive compensation plan designs look at the current tax laws and take those laws into consideration. As the deck chairs rearrange themselves and new players get introduced, the whole compensation question is veiled in mystery and supposition. Kruze is a leader in accounting services for startups. We hope this report simplifies your startup CEO pay decision! Peter Thiel has actually set an upper limit for startup CEO salaries. Same with fintech at $129,000. Our data shows that the average annual salary for a CEO of a seed or venture backed company is $130,000. Interested in other data on startup spending? As the table below shows, the median level of CEO ownership has risen since 1998. How much can your startup save in payroll taxes? The CEO of a seed or venture-backed startup company makes an average annual salary of $130,000, according to a recent report from Kruze Consulting. Most people won’t come out ahead, but those who know how to play the game can sometimes win big. As with most things in life, managing compensation issues inside of a startup is all about balance. 2019 Startup CEO Salary Report Last year, we analyzed data from 125 startups to find that the average 2018 salary for a startup CEO was $130,000. An executive compensation plan must act as an incentive and retention device for startup executives while delivering a fair return to investors and shareholders who have funded the company. Total Cash Compensation information is comprised of yearly Base Pay and Bonuses. Executive compensation covers employees that include company presidents, chief executive officers (CEOs), chief financial officers (CFOs), vice presidents, occasionally directors, and other upper-level managers.These high-level employees are paid executive compensation. So unless you raise millions and millions of dollars right from launch, it’s difficult to justify a high startup CEO salary. What should independent directors expect in the way of compensation for serving on a startup’s board of directors? When we compared the salaries of male Chief Executives versus females, we found that the numbers were roughly the same – $138,000 per year for women versus $143,000 for men. We’ve found that there are a variety of factors that can influence the salary of a startup CEO. This year, we expanded the data to over 200 of our seed and venture-backed clients and found that in 2019, CEO salaries rose to an average of $142,000 annually, nearly a 10% increase . Note: The executive compensation plan outlined below was jointly developed with @joannezchen, Partner at Foundation Capital. Executive compensation at large or public companies is an even more nuanced topic, on both sides of the table. CEOs of funded startups make many important decisions - including compensation decisions. When I started thinking about joining Keen, I quickly realized there is a lot I don’t know about startups. Start Salary Survey. Total compensation for CEOs goes beyond cash and stock Although typically excluded from pay calculations, executive benefits and perquisites are disclosed in the summary compensation table and the retirement plan section of the proxy. Keep it as low as possible, expect option grants and bonuses for success, and keep in mind the real source of value is your equity: Benioff, Shiong, Dorsey, and Bezos owned 32%, 57%, 24%, and 48% of their respective companies at the time they went public. It goes without saying they made a lot more money on their equity than they did on salaries. Detailed data from this survey is analyzed and presented in our acclaimed annual CEO & Senior Executive Compensation Report for Private Companies. Since 2008, there has been a secular trend to increase cash compensation and decrease equity to startup management teams. Chief Executive Research surveyed 1,631 companies in April thru June of 2018 about their fiscal 2017 and 2018 compensation levels and practices. Here are a couple of examples showing how things can go wrong. Example 1: A minority co-founder (say, 10%), who has not been paid any cash compensation (and is not an exempt salaried employee – see below), is not working out and is let go. The table below shows 2016 median cash and equity compensation for six developmental cuts of survey data. Equity is one of my favorite tools as a startup founder. When the executive is also a founder, that also impacts compensation because they’ll likely be given more equity in the company rather than being directly compensated. For a pre-Series A company with strategic/angel investment that is earning revenue around 1.5-2M/year, what should the non-founder executives (CTO, COO, CMO) be compensated in terms of salary and equity? Company boards, at least in principle, try to use compensation contracts to align executives' actions with company success. Here’s a basic framework. The 2018 Startup CEO Salary Report was created by Healy Jones, Senior Consultant Alex Janeck and Staff Accountant Litzy Yang. Executive compensation is a significant thing to consider when evaluating an investment opportunity. Seeking Professional Advice. With over $2 billion in funding raised by our clients, Kruze is a leader in helping funded startups with accounting, tax, finance and HR strategies. As we found last year, the highest-paid CEOs fell predominantly into the healthcare and biotech categories. Raise capital faster with Crunchbase Pro – try it free. Meanwhile, those of SaaS companies made on average $113,000 in 2018, which rose 7% to $121,000 in 2019. Executive Compensation Table Excerpt from Apple’s 2020 Filings To understand the significance of this table, and other corporate filings always read through footnotes and attached notes. To gain some insights into the matter I am planning to attend a special session of the Technology Executive Roundtable on Atlanta technology executive compensation tomorrow. Background reading: Founder Compensation: Cash, Equity, Liquidity Fatal Errors in Early Startup Hiring Early Hires: Options or Stock Given how deeply involved we are with early-stage startups hiring their first key employees, I figured it would be helpful to outline a few key principles to help entrepreneurs navigate the topic. And when startups are thrown into the conversation, the picture only becomes more blurred. We’ve found that CEOs in some industries have higher average salaries than others. While there is no dataset explicitly outlining CEO salary levels at early stage companies, we can use the salaries from tech companies at their IPO to get a sense for what the salary should be for a successfully exiting CEO. The compensation of the founder-CEO should be benchmarked to the market after benchmarking the rest of the function heads to the market. It sets an example for the rest of the company, establishes a culture of cash efficiency/frugality, and shows a founder putting the company ahead of himself/herself. National Average. Pay for performance is a compensation strategy to align executive compensation with the company's success. Does the CEO want some deferred compensation — this is a very difficult thing to do correctly with current tax laws but it … It’s a good time to be the boss. Founders taking low salaries also show very well when going to raise money. Companies that have raised more tend to offer the CEO higher salaries. Last year, we analyzed data from 125 startups to find that the average 2018 salary for a startup CEO was $130,000. Compensation at a startup company is largely made up of three components: salary, benefits, and equity. As of Nov 27, 2020, the average annual pay for a Startup CEO in the United States is $110,959 a year. From 1998 to 2007, the median for each year averaged $156k. The one decline we saw was for eCommerce companies, who saw their salaries dip nearly 4% in 2019. $10.34 $53 /hour $163.70. What Salaries Did Startup CEOs Earn in 2019. To do so, we use individual-level data from Advanced HR, a leading provider of executive compensation data for VC-backed startups, to study both the level and evolution of CEO compensation. The earlier a startup can put a plan in place to manage compensation conversations and questions, the fewer problems they’ll have in this area going forward. The activity and success seen in the venture-backed biotech space has trickled down to the compensation of the executive teams and scientists running these companies. We’ve seen a wide range of CEO salaries at venture-backed companies, from as low as $35k annually to as much as $325k (plus bonus). Do you know what people like you are earning? Note that our dataset is only for funded companies, with the average company in this analysis having raised between $7 and $8 million in venture and seed financing. Reduce your startup's burn with Research & Development tax credits, Experts in raising capital and working with VCs, Venture Debt fundraising advice for VC backed startups, Experience helping funded startups navigate the M&A diligence process, High quality 409A's at a discounted price, Answers to hundreds of startup accounting, finance, HR and tax Q's, Expert startup accounting (and more) advice, We have created several financial models that you can use for free, After working with hundreds of startups, we picked the best credit cards. Just in case you need a simple salary calculator, that works out to be approximately $53.35 an hour. Seed Stage CEO Salary by Industry (in thousands), Seed Stage Ceo Salaries by Industry (in thousands), plenty written about the pay disparity between women and men. From 2008 to 2016, the median averaged $283k. This year, we expanded the data to over 200 of our seed and venture-backed clients and found that in 2019, CEO salaries rose to an average of $142,000 annually, nearly a 10% increase. Risk and Reward . Salary and equity comprise the compensation package. Executives who are improperly compensated may not have the incentive to … Kruze Consulting was founded in 2012 by Vanessa Kruze, a big four alum, startup controller and CPA. 2% of jobs. Tying compensation to funding rounds cannot be applied uniformly across startups. Based on our analysis of the data, this small difference can be explained by the fact that the female CEOs in our dataset are predominantly running earlier stage companies. Your request has been submitted.We will contact you shortly. According to our founder and CEO of Kruze Consulting, Vanessa Kruze, “this year’s data indicates that startup CEOs are making around 10% more than last year, which is to be expected since funding rounds increased in size year over year.”. Distinguished startup investor Paul Graham has emphasized that it’s best to think of a startup as any early stage company intending to grow quickly. The startup you work for is gaining acceptance in the market and with remarkable growth, you are now eyeing the prospects of an IPO. MICROSOFT CORP income statements for executive base pay and bonus are filed yearly with the SEC in the edgar filing system. We looked at our payroll data for over 125 seed and venture-backed startups to come up with the answer. One trend remained the same as last year: the more you raise, the more you get paid. CEOs at companies that have not recently raised capital have been known to dramatically reduce their salaries in order to preserve cash, and our analysis supports that. $130,000 per year. There’s no shortage of startups to work for, but most are going to fail, says Greg Carney, who, after working for a series of startups, is now director of consulting for Miami engineering firm Carney-Neuhaus. An executive compensation plan must act as an incentive and retention device for startup executives while delivering a fair return to investors and shareholders who have funded the company. At startups like ours, stock options are often a major component of compensation … What an employee receives in equity, cash, and benefits depends on the role they’re filling, the sector they work in, where they and the company are located, and the possible value that specific individual may bring to the company. As a rule of thumb a non-founder CEO joining an early stage startup (that has been running less than a year) would receive 7-10% equity. A non-founding CEO of early stage company equity ranges from 5% - 10% typically. When we look exclusively at Seed and Series A Chief Exec salaries, the difference in pay between men and women practically vanishes.