Executive Compensation: Life Sciences & HealthCare 2013 CompStudy Insights
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Executive Compensation: Insights from the 2013 CompStudy Survey, Life Sciences & Healthcare Edition ...

Executive Compensation: Insights from the 2013 CompStudy Survey, Life Sciences & Healthcare Edition

Explores the CompStudy as well as:
- Current Founder’s Dilemmas research
- 2013 survey – company profiles
- Summary compensation data
- CEO compensation review
- Hot topics and current trends

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Executive Compensation: Life Sciences & HealthCare 2013 CompStudy Insights Presentation Transcript

  • 1. Life Sciences Edition Executive Compensation: Insights from the 2013 CompStudy Survey LIFE SCIENCES & HEALTHCARE EDITION
  • 2. Today’s moderator Bryan Pearce Partner, Americas Director, EY Entrepreneur of the Year, EY Presented by Park Square, WilmerHale and EY www.compstudy.com | 2
  • 3. Today’s presenters Bruce Booth Glen Giovannetti Atlas Ventures Partner EY Global Life Sciences Sector Leader Rosemary Reilly Noam Wasserman WilmerHale Partner Erik R. Lundh Park Square Managing Partner Kimberly Wethly Harvard Business School WilmerHale Associate Professor, Partner Tukman Faculty Fellow Presented by Park Square, WilmerHale and EY www.compstudy.com | 3
  • 4. Today’s agenda • CompStudy overview • Current Founder’s Dilemmas research • 2013 survey – company profiles • Summary compensation data • CEO compensation review • Hot topics and current trends Presented by Park Square, WilmerHale and EY www.compstudy.com | 4
  • 5. CompStudy Overview CompStudy.com • All reporting now done on our online, fully interactive platform, located at CompStudy.com. • Participants in the annual survey receive free, year-long access to the reports. Access is also available for purchase. • New features for 2013:  New options for filtering the data, including company valuation, profitability, CEO experience, and more  Enhanced Board of Directors reporting  Additional printable summarylevel charts Presented by Park Square, WilmerHale and EY www.compstudy.com | 5
  • 6. CompStudy Overview Technology Survey 2000 2013 211 cos. 550 cos. The CompStudy.com Survey Data collected in every survey includes: • Cash compensation and equity • Founding team • Financing history • Company size Life Sciences Survey • Products/revenue 2002 • Equity programs 168 cos. 2013 256 cos. • Executive backgrounds • Board of directors Presented by Park Square, WilmerHale and EY www.compstudy.com | 6
  • 7. Today’s agenda • CompStudy overview • Current Founder’s Dilemmas research • 2013 survey – company profiles • Summary compensation data • CEO compensation review • Hot topics and current trends Presented by Park Square, WilmerHale and EY www.compstudy.com | 7
  • 8. CORE DILEMMAS Founding HIRES Exit Dilemmas Y COFOUNDERS Beyond the Team Y New-Venture Hiring Y Y CORE FOUNDER Building the Team Y When to Found INVESTORS, ALL OF THE PARTNERS ABOVE
  • 9. THE RESEARCH 6,300 startups 16,000 founders 31,000 executives
  • 10. Kaplan-Meier survival estimate 95%, pointwise confidence band shown 1 1 1 2 2 3 3 18 7 9 16 5 23 53 5 1.00 0.75 14 2 3 6 3 23 4 4 4 0.50 5 3 2 0.25 . 0.00 0 50 # of months l i ti 100
  • 11. It “ was likeinbeing punched the stomach. ” http://techcrunch.com/2011/03/03/jack-dorsey-twitter-punched-stomach/
  • 12. “RICH VS. KING” CONTROL FINANCIAL GAINS Low High Small Player Big Player Flop RICH KING Rich & King
  • 13. Value Control N=3,775 IT and LS startups, 2005-2012
  • 14. Value 6% 17% 14% Control 15% 15% 15% 12% 4% 3% N=3,775 IT and LS startups, 2005-2012
  • 15. part, had “For mybe theIfirst rather man among these [lesser] fellows, than the second man in Rome. ”
  • 16. POST-SUCCESSION EXECUTIVE ROLES 35 30 25 20 15 10 5 0 Source: Wasserman (2008), “Replacing the Founder,” 212 ventures .
  • 17. • • • • • Detailed table of contents Chapter 1 Self-assessment survey “When to Leap” video Other awesome stuff  NoamWasserman.com
  • 18. Audience Poll What is your company’s outlook on the economy over the next 12-18 months: A. Things are good and getting better B. Still receiving mixed signals from the market C. Growing increasingly concerned about a downturn Webinar poll results: A. 44% B. 47% C. 9% Presented by Park Square, WilmerHale and EY www.compstudy.com | 19
  • 19. Today’s agenda • CompStudy overview • Current Founder’s Dilemmas research • 2013 survey – company profiles • Summary compensation data • CEO compensation review • Hot topics and current trends Presented by Park Square, WilmerHale and EY www.compstudy.com | 20
  • 20. 2013 Survey – Company Profiles Institutional rounds raised Headcount Later stage companies are betterrepresented in this year’s survey; 82% of the companies surveyed have raised 2+ rounds of financing, compared to 78% in 2012. Respondent company headcounts were slightly larger than in 2012, though the distribution is fairly close. % respondents in this range % respondents in this range Number of rounds Number of full time employees Presented by Park Square, WilmerHale and EY www.compstudy.com | 21
  • 21. 2013 Survey – Company Profiles Geography % respondents in this range Revenue Business Segments % respondents in this range Presented by Park Square, WilmerHale and EY www.compstudy.com | 22
  • 22. 2013 Survey – Company Profiles Founder status - % of role held by founders vs. non-founders Participants had essentially the same founder/non-founder split by position profile as in 2012 Presented by Park Square, WilmerHale and EY www.compstudy.com | 23
  • 23. Audience Poll What change do you anticipate for base salaries next year? A. Decrease B. No change C. Increase up to 5% D. Increase between 5% and 10% E. Increase more than 10% Webinar poll results: A. 1% B. 17% C. 70% Presented by Park Square, WilmerHale and EY D. 9% E. 3% www.compstudy.com | 24
  • 24. Today’s agenda • CompStudy overview • Current Founder’s Dilemmas research • 2013 survey – company profiles • Summary compensation data • CEO compensation review • Hot topics and current trends Presented by Park Square, WilmerHale and EY www.compstudy.com | 25
  • 25. Compensation data Founder cash compensation *Fewer positions shown due to lack of founders in certain roles Founder CEO salaries were up slightly less than their non-founder peers: 0.9% vs 1.42% Presented by Park Square, WilmerHale and EY www.compstudy.com | 26
  • 26. Compensation data Founder current equity holdings, as % of fully diluted shares *Fewer positions shown due to lack of founders in certain roles On the average, founders of life sciences companies hold significantly less equity than their technology peers – largely due to the more capital-intensive nature of most life sciences start-ups. % equity owned, fully diluted Presented by Park Square, WilmerHale and EY www.compstudy.com | 27
  • 27. CompStudy Overview Percentage growth in year-over-year non-founder total target cash compensation Presented by Park Square, WilmerHale and EY www.compstudy.com | 28
  • 28. Compensation data Cash compensation – non-founders, 2012 and 2013 Non-founder total target cash compensation was up 3% in 2013, down slightly from the 3.5% rate of increase between 2011 and 2012. Presented by Park Square, WilmerHale and EY www.compstudy.com | 29
  • 29. Compensation data Bonus as a percentage of base salaries – non-founders On average in 2012, non-founder executives received 67.8% of their target bonuses, up slightly from 65.5% in 2011. % of base salary Presented by Park Square, WilmerHale and EY www.compstudy.com | 30
  • 30. Compensation data Equity holdings – non-founder executives Current equity - % of fully diluted shares Equity at hire - % of fully diluted shares Presented by Park Square, WilmerHale and EY www.compstudy.com | 31
  • 31. Audience Poll What percentage of the equity in your company is reserved for management, directors and employees? A. Less than 10% B. 11 – 15% C. 16 – 20% D. 21 – 25% E. More than 25% Webinar poll results: A. 29% B. 36% C. 20% Presented by Park Square, WilmerHale and EY D. 5% E. 9% www.compstudy.com | 32
  • 32. Compensation data Equity holdings – type of equity vehicles used % of equity grants given by vehicle type Presented by Park Square, WilmerHale and EY www.compstudy.com | 33
  • 33. Compensation data Percentage of non-founder executives eligible for severance 67.3% of non-founder CEOs surveyed had some sort of severance package, down from the survey’s historical average of 73%. No other position exceeded 50% participation. % eligible for severance Presented by Park Square, WilmerHale and EY www.compstudy.com | 34
  • 34. Compensation data Length of severance packages granted (months) As the median numbers suggest, the length of nearly every severance package granted is a multiple of three months Presented by Park Square, WilmerHale and EY www.compstudy.com | 35
  • 35. Today’s agenda • CompStudy overview • Current Founder’s Dilemmas research • 2013 survey – company profiles • Summary compensation data • CEO compensation review • Hot topics and current trends Presented by Park Square, WilmerHale and EY www.compstudy.com | 36
  • 36. CEO compensation review Non-founder CEO base (1,000s USD) CEO salaries are more highly correlated with company headcount, as evidenced in the chart above by the large gap in pay between CEOs at 1-20 FTE companies and CEOs at 21-40 FTE companies By number of financing rounds raised By number of full time employees Presented by Park Square, WilmerHale and EY www.compstudy.com | 37
  • 37. CEO compensation review Non-founder CEO current equity (% of fully diluted shares) Headcount is a slightly better predictor of non-founder CEO equity; there is a lot of variability in the data when sliced by financing status. This is partly attributable to difference between therapeutics companies and all others in the survey; more filters can be applied at CompStudy.com By number of financing rounds raised By number of full time employees Presented by Park Square, WilmerHale and EY www.compstudy.com | 38
  • 38. Today’s agenda • CompStudy overview • Current Founder’s Dilemmas research • 2013 survey – company profiles • Summary compensation data • CEO compensation review • Hot topics and current trends Presented by Park Square, WilmerHale and EY www.compstudy.com | 39
  • 39. Hot topics and current trends • Recruiting and retaining top talent in an increasingly competitive market - Founder transitions - Recruiting dynamics - Retention issues • Compensation differences between earlier and later stage companies • Alternatives to dilutive equity issuances • 409A Valuations • Compensation in a holding company model Presented by Park Square, WilmerHale and EY www.compstudy.com | 40
  • 40. Recap • 1-minute recap from each panelist Presented by Park Square, WilmerHale and EY www.compstudy.com | 41