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Parksquare - 2013 Compensation & Entrepreneurship Report in Technology - November 2013

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    Parksquare - 2013 Compensation & Entrepreneurship Report in Technology - November 2013 Parksquare - 2013 Compensation & Entrepreneurship Report in Technology - November 2013 Document Transcript

    • A SERVICE FROM PARK SQUARE EXECUTIVE SEARCH Abbreviated Edition technology 2013 Special Access Code cs2013tech Visit www.compstudy.com and register to receive full access Sponsored By: www.compstudy.com © Copyright 1999-2013, Park Square Executive Search LLC. All Rights Reserved
    • 2013 Compensation & Entrepreneurship Report in Technology 2013 Compensation & Entrepreneurship Report in Technology Founder Compensation and Sponsor Information TABLE OF CONTENTS Letter to the Industry Demographics 3 On behalf of Park Square Executive Search, EY, WilmerHale, and Professor Noam USD 1,000’s Cash Compensation Wasserman of Harvard Business School, I’d like to welcome you to the 2013 edition $350 of our annual Compensation and Entrepreneurship Report in Technology. This $300 Equity and Severance CEO Compensation by Headcount 4 5 Founder Cash Compensation report—our fourteenth annual and largest to date—includes summaries and analysis of compensation data collected from executives at more than 550 private companies 6 Founder Compensation and Sponsor Information 7 from across the country in software, hardware, content, clean tech and other $250 34.9 industries. The survey data for this edition were collected between May and August of 2013. 17 $100 240.6 72 34.5 19 $200 $150 28 87.5 57 19.3 24 63.4 83.8 19.5 29.6 36.9 9.3 16.3 248.4 257.5 182.8 206.6 191.3 26 51.9 26.3 64.8 30.8 35.3 6 205.4 192.8 164.7 comparable compensation data to assist them in the critical decisions involved in $0 174.6 180.8 152.3 CEO Head of Finance/CFO Head of Bus Dev/CBO 47.8 199.5 164.7 $50 This survey responds to our clients’ continuing need for better access to reliable, 18.5 260 Head of Clinical Research Head of Regulatory Affairs Research & Develop/CSC Head of Platform Tech/CTO 148.7 Head of Engineering attracting, motivating and retaining key executives at private companies. 2012 Base Salary 2012 Bonus Received 2012 Unachieved Bonus 2013 Base Salary 2013 Target Bonus We are able to present correlations between executive compensation and a number of variables, including: financing stage, company size both in terms of product stage and headcount, founder/non-founder status, industry segment and geography. We also provide a number of analytics on Board of Directors compensation and make- Founder Total Cash Founder Equity Holdings • Founder CEOs received a more substantial raise than their non-founder peers: 2.5% vs 0.8%. • On the average, founders of technology companies hold significantly more equity than their life science peers – largely due to the less capital-intensive nature of most technology start-ups. up, company equity plans, and a look at how organizations develop as they raise additional financing. This summary document provides only high level excerpts from the detailed analysis available on-line at www.compstudy.com. Complete access to the data is available Sponsor Information free of charge to survey participants and is also available as a paid subscription. Thanks for reading, Park Square Executive Search is a retainer-based executive search firm located in Cambridge, Massachusetts and in Menlo Park, California. Park Square serves clients and institutions that are changing the world through discovery, innovation, and growth. Aaron Lapat Managing Partner Park Square Executive Search www.parksquare.com EY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities. WilmerHale offers unparalleled legal representation across a comprehensive range of practice areas that are critical to the success of our clients. We practice at the very top of the legal profession and offer a cutting-edge blend of capabilities that enables us to handle deals and cases of any size and complexity. www.wilmerhale.com www.ey.com # www.compstudy.com | www.parksquare.com www.compstudy.com | www.parksquare.com # 7
    • 2013 Compensation & Entrepreneurship Report in Technology 2013 Compensation & Entrepreneurship Report in Technology CEO Compensation by Headcount Demographics When controlling for other variables, headcount has proven to be the best predictor of non-founder cash compensation. Equity holdings tend to be most strongly correlated with the number of financing rounds a company has raised. This survey of executive compensation in privately held technology companies was conducted between May and August of 2013. The questionnaire resulted in 550 companies participating with data from over 3,000 executives in a wide cross section of industry sectors, geographies and stages of development. Base Salary: By Number of Full-time Employees Geography Equity: By Number of Full-time Employees 1,000’s USD $300 $250 $200 $150 $100 $50 $0 % respondents in this range 14% % Fully Diluted Shares $350 Financing Rounds Raised 25th 50th Mean 75th 1–20 FTEs 123.8 181.5 183.7 226.3 21–40 FTEs 225 250 260.7 41+ FTEs 245 275 281.5 12% 10% 11.3 8% 12.2 6% California 28.2 New England 20 15 Mid Atlantic 4% 7.6 Midwest 2% 0% % respondents in this range 25 15.1 25th 50th Mean 75th 1–20 FTEs 5 6.2 10.4 21–40 FTEs 3.6 5 5.3 41+ FTEs 3.7 5 5.3 6.2 South 22.3 21 17 16.3 11.6 5 11.8 7.4 306 25.6 11.6 289 West 10 0 0 1 2 3 4 5 or more The geographic distribution in 2013 closely mirrors venture capital funding trends, and the universe of private companies at large. The companies in this year’s survey are at roughly the same stage as in last year’s survey, when measured by the number of financing rounds raised. Business Segment Headcount by Number of Full-Time Employees Slice this data yourself at www.compstudy.com % respondents in this range 1.5 3 Software Communications 9.2 Hardware/Semi 14 52.9 8 IT Services/Consulting Digital Media/Content/Information % respondents in this range 50 40 30 20 44.9 Clean Tech 7.5 Healthcare IT 10 18.8 Other 3.9 Software companies continue to make up half of the population; Clean Tech has been the fastest-growing segment over the past three years. 0 1–20 21–40 14.4 41–75 22 76+ Respondent company headcounts were distributed similarly to those in the 2012 survey, with a slightly higher percentage of large companies this year. Screenshot of online reporting tool # 6 www.compstudy.com | www.parksquare.com www.compstudy.com | www.parksquare.com # 3
    • 2013 Compensation & Entrepreneurship Report in Technology 2013 Compensation & Entrepreneurship Report in Technology Cash Compensation Equity and Severance This data compares 2013 compensation data with compensation data for 2012 non-founding executives. 2012 figures are represented with both actual bonus received and total unachieved target bonus for the year. 2013 bonus figures indicate at-plan target amounts. More granular analysis can be found online at www.compstudy.com. The CompStudy survey also contains detailed questions around non-cash executive compensation and benefits. The 2013 online reports show base, bonus, equity at hire, current equity, and severance for each executive role. More granular analysis can be found online at www.compstudy.com. Total Cash Compensation: Non-Founders Equity Holdings USD 1,000’s % equity owned, fully diluted $400 8 $350 54 $300 83 6 33 $250 23 17 $200 $150 7 131 250 76 49 17 63 41 16 41 259 182 $100 189 177 185 11.6 172 33 115 56 179 19 28 48 81 26 56 27 11.8 165 169 173 178 8 7 35 168 164 43 34 188 142 142 54 48 39 176 174 5 31 84 51 190 161 158 17 4 3 6.2 5 2 $50 $0 0 2.6 1 CEO COO Head of Finance/CFO 2012 Base Salary Head of Tech/CTO Head of Engineering 2012 Bonus Received Head of Sales Head of Marketing 2012 Unachieved Bonus • Non-founder total target cash compensation was up 1.6% in 2013, down markedly from the 4.8% rate of increase between 2011 and 2012. Many positions saw lower target bonuses in 2013, highlighted by a 4.4% decrease in the target for non-founder CEOs. Head of Bus Dev/CBO Head of HR Head of Prof Svcs 2013 Base Salary General Counsel 2.6 2 0.9 CEO COO 1.1 1 Head of Finance/CFO 1 Head of Tech/CTO 1 Head of Engineering 2013 Target Bonus • On average in 2012, non-founder executives received 65.5% of their target bonuses, up from 60.3% in 2011. 1.2 1.2 0.6 Head of Sales 0.8 0.7 Head of Marketing 2013 Median 1.1 0.1 Head of Bus Dev/CBO 0.2 0.5 Head of HR 0.9 Head of Prof Svcs 0.2 0.3 General Counsel 2013 Mean • These equity figures are averages covering companies across the maturity and fundraising spectrum. • As the chart below illustrates, only CEOs consistently received any severance package. Bonus as a Percentage of Base Salary • Earlier-stage non-founder executives do tend to have more equity, but dilution effects tend to level off after the second round of financing has been raised. • Nearly all severance packages are granted in three-month increments. The median length of severance for CEOs is six months. For all other positions it is three months. Severance Eligibility % of base salary % eligible for severance 70% 80 60% 70 18.6 50% 40% 60 20 17 30% 20% 16.3 12.1 9.4 46.3 31.1 11.6 38.7 25.7 10% 0% 8.6 31.9 22.3 22.2 28 48 14.9 31.8 25.3 16.2 COO Head of Finance/CFO Head of Tech/CTO Head of Engineering 5 4.8 27.1 22.5 15.8 Head of Sales Head of Marketing 2012 Unachieved Bonus 17 40 26 28.4 16.1 22.9 17.7 30 21.6 Head of Bus Dev/CBO Head of HR Head of Prof Svcs General Counsel 63.5 20 33.3 33.9 26.3 10 0 CEO 2012 Bonus Received # 4 45.8 11 50 17.4 63.3 26 18.1 CEO COO Head of Finance/CFO Head of Tech/CTO Head of Engineering Head of Sales 21 Head of Marketing 25 26.2 Head of HR Head of Prof Svcs 34.3 16.8 Head of Bus Dev/CBO General Counsel 2013 Target Bonus www.compstudy.com | www.parksquare.com www.compstudy.com | www.parksquare.com # 5
    • 2013 Compensation & Entrepreneurship Report in Technology 2013 Compensation & Entrepreneurship Report in Technology Cash Compensation Equity and Severance This data compares 2013 compensation data with compensation data for 2012 non-founding executives. 2012 figures are represented with both actual bonus received and total unachieved target bonus for the year. 2013 bonus figures indicate at-plan target amounts. More granular analysis can be found online at www.compstudy.com. The CompStudy survey also contains detailed questions around non-cash executive compensation and benefits. The 2013 online reports show base, bonus, equity at hire, current equity, and severance for each executive role. More granular analysis can be found online at www.compstudy.com. Total Cash Compensation: Non-Founders Equity Holdings USD 1,000’s % equity owned, fully diluted $400 8 $350 54 $300 83 6 33 $250 23 17 $200 $150 7 131 250 76 49 17 63 41 16 41 259 182 $100 189 177 185 11.6 172 33 115 56 179 19 28 48 81 26 56 27 11.8 165 169 173 178 8 7 35 168 164 43 34 188 142 142 54 48 39 176 174 5 31 84 51 190 161 158 17 4 3 6.2 5 2 $50 $0 0 2.6 1 CEO COO Head of Finance/CFO 2012 Base Salary Head of Tech/CTO Head of Engineering 2012 Bonus Received Head of Sales Head of Marketing 2012 Unachieved Bonus • Non-founder total target cash compensation was up 1.6% in 2013, down markedly from the 4.8% rate of increase between 2011 and 2012. Many positions saw lower target bonuses in 2013, highlighted by a 4.4% decrease in the target for non-founder CEOs. Head of Bus Dev/CBO Head of HR Head of Prof Svcs 2013 Base Salary General Counsel 2.6 2 0.9 CEO COO 1.1 1 Head of Finance/CFO 1 Head of Tech/CTO 1 Head of Engineering 2013 Target Bonus • On average in 2012, non-founder executives received 65.5% of their target bonuses, up from 60.3% in 2011. 1.2 1.2 0.6 Head of Sales 0.8 0.7 Head of Marketing 2013 Median 1.1 0.1 Head of Bus Dev/CBO 0.2 0.5 Head of HR 0.9 Head of Prof Svcs 0.2 0.3 General Counsel 2013 Mean • These equity figures are averages covering companies across the maturity and fundraising spectrum. • As the chart below illustrates, only CEOs consistently received any severance package. Bonus as a Percentage of Base Salary • Earlier-stage non-founder executives do tend to have more equity, but dilution effects tend to level off after the second round of financing has been raised. • Nearly all severance packages are granted in three-month increments. The median length of severance for CEOs is six months. For all other positions it is three months. Severance Eligibility % of base salary % eligible for severance 70% 80 60% 70 18.6 50% 40% 60 20 17 30% 20% 16.3 12.1 9.4 46.3 31.1 11.6 38.7 25.7 10% 0% 8.6 31.9 22.3 22.2 28 48 14.9 31.8 25.3 16.2 COO Head of Finance/CFO Head of Tech/CTO Head of Engineering 5 4.8 27.1 22.5 15.8 Head of Sales Head of Marketing 2012 Unachieved Bonus 17 40 26 28.4 16.1 22.9 17.7 30 21.6 Head of Bus Dev/CBO Head of HR Head of Prof Svcs General Counsel 63.5 20 33.3 33.9 26.3 10 0 CEO 2012 Bonus Received # 4 45.8 11 50 17.4 63.3 26 18.1 CEO COO Head of Finance/CFO Head of Tech/CTO Head of Engineering Head of Sales 21 Head of Marketing 25 26.2 Head of HR Head of Prof Svcs 34.3 16.8 Head of Bus Dev/CBO General Counsel 2013 Target Bonus www.compstudy.com | www.parksquare.com www.compstudy.com | www.parksquare.com # 5
    • 2013 Compensation & Entrepreneurship Report in Technology 2013 Compensation & Entrepreneurship Report in Technology CEO Compensation by Headcount Demographics When controlling for other variables, headcount has proven to be the best predictor of non-founder cash compensation. Equity holdings tend to be most strongly correlated with the number of financing rounds a company has raised. This survey of executive compensation in privately held technology companies was conducted between May and August of 2013. The questionnaire resulted in 550 companies participating with data from over 3,000 executives in a wide cross section of industry sectors, geographies and stages of development. Base Salary: By Number of Full-time Employees Geography Equity: By Number of Full-time Employees 1,000’s USD $300 $250 $200 $150 $100 $50 $0 % respondents in this range 14% % Fully Diluted Shares $350 Financing Rounds Raised 25th 50th Mean 75th 1–20 FTEs 123.8 181.5 183.7 226.3 21–40 FTEs 225 250 260.7 41+ FTEs 245 275 281.5 12% 10% 11.3 8% 12.2 6% California 28.2 New England 20 15 Mid Atlantic 4% 7.6 Midwest 2% 0% % respondents in this range 25 15.1 25th 50th Mean 75th 1–20 FTEs 5 6.2 10.4 21–40 FTEs 3.6 5 5.3 41+ FTEs 3.7 5 5.3 6.2 South 22.3 21 17 16.3 11.6 5 11.8 7.4 306 25.6 11.6 289 West 10 0 0 1 2 3 4 5 or more The geographic distribution in 2013 closely mirrors venture capital funding trends, and the universe of private companies at large. The companies in this year’s survey are at roughly the same stage as in last year’s survey, when measured by the number of financing rounds raised. Business Segment Headcount by Number of Full-Time Employees Slice this data yourself at www.compstudy.com % respondents in this range 1.5 3 Software Communications 9.2 Hardware/Semi 14 52.9 8 IT Services/Consulting Digital Media/Content/Information % respondents in this range 50 40 30 20 44.9 Clean Tech 7.5 Healthcare IT 10 18.8 Other 3.9 Software companies continue to make up half of the population; Clean Tech has been the fastest-growing segment over the past three years. 0 1–20 21–40 14.4 41–75 22 76+ Respondent company headcounts were distributed similarly to those in the 2012 survey, with a slightly higher percentage of large companies this year. Screenshot of online reporting tool # 6 www.compstudy.com | www.parksquare.com www.compstudy.com | www.parksquare.com # 3
    • 2013 Compensation & Entrepreneurship Report in Technology 2013 Compensation & Entrepreneurship Report in Technology Founder Compensation and Sponsor Information TABLE OF CONTENTS Letter to the Industry Demographics 3 On behalf of Park Square Executive Search, EY, WilmerHale, and Professor Noam USD 1,000’s Cash Compensation Wasserman of Harvard Business School, I’d like to welcome you to the 2013 edition $350 of our annual Compensation and Entrepreneurship Report in Technology. This $300 Equity and Severance CEO Compensation by Headcount 4 5 Founder Cash Compensation report—our fourteenth annual and largest to date—includes summaries and analysis of compensation data collected from executives at more than 550 private companies 6 Founder Compensation and Sponsor Information 7 from across the country in software, hardware, content, clean tech and other $250 34.9 industries. The survey data for this edition were collected between May and August of 2013. 17 $100 240.6 72 34.5 19 $200 $150 28 87.5 57 19.3 24 63.4 83.8 19.5 29.6 36.9 9.3 16.3 248.4 257.5 182.8 206.6 191.3 26 51.9 26.3 64.8 30.8 35.3 6 205.4 192.8 164.7 comparable compensation data to assist them in the critical decisions involved in $0 174.6 180.8 152.3 CEO Head of Finance/CFO Head of Bus Dev/CBO 47.8 199.5 164.7 $50 This survey responds to our clients’ continuing need for better access to reliable, 18.5 260 Head of Clinical Research Head of Regulatory Affairs Research & Develop/CSC Head of Platform Tech/CTO 148.7 Head of Engineering attracting, motivating and retaining key executives at private companies. 2012 Base Salary 2012 Bonus Received 2012 Unachieved Bonus 2013 Base Salary 2013 Target Bonus We are able to present correlations between executive compensation and a number of variables, including: financing stage, company size both in terms of product stage and headcount, founder/non-founder status, industry segment and geography. We also provide a number of analytics on Board of Directors compensation and make- Founder Total Cash Founder Equity Holdings • Founder CEOs received a more substantial raise than their non-founder peers: 2.5% vs 0.8%. • On the average, founders of technology companies hold significantly more equity than their life science peers – largely due to the less capital-intensive nature of most technology start-ups. up, company equity plans, and a look at how organizations develop as they raise additional financing. This summary document provides only high level excerpts from the detailed analysis available on-line at www.compstudy.com. Complete access to the data is available Sponsor Information free of charge to survey participants and is also available as a paid subscription. Thanks for reading, Park Square Executive Search is a retainer-based executive search firm located in Cambridge, Massachusetts and in Menlo Park, California. Park Square serves clients and institutions that are changing the world through discovery, innovation, and growth. Aaron Lapat Managing Partner Park Square Executive Search www.parksquare.com EY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities. WilmerHale offers unparalleled legal representation across a comprehensive range of practice areas that are critical to the success of our clients. We practice at the very top of the legal profession and offer a cutting-edge blend of capabilities that enables us to handle deals and cases of any size and complexity. www.wilmerhale.com www.ey.com # www.compstudy.com | www.parksquare.com www.compstudy.com | www.parksquare.com # 7
    • A SERVICE FROM PARK SQUARE EXECUTIVE SEARCH Abbreviated Edition technology 2013 Special Access Code cs2013tech Visit www.compstudy.com and register to receive full access Sponsored By: www.compstudy.com © Copyright 1999-2013, Park Square Executive Search LLC. All Rights Reserved