Life Sciences Edition Executive Compensation · Executive Compensation: Insights from the 2014...

Executive Compensation: Insights from the 2014 CompStudy Survey of Venture-Backed Companies

TECHNOLOGY EDITION

Life Sciences Edition

www.compstudy.com | 2

Today’s moderator

Bryan Pearce Global Leader | EY Entrepreneur Of The Year™ and Venture Capital

Presented by Park Square, WilmerHale and EY


Today’s presenters

Aaron Lapat Park Square Managing Partner

David Gammell WilmerHale Partner

Kimberly Wethly WilmerHale Partner


Noam Wasserman Harvard Business School Associate Professor, Tukman Faculty Fellow

Martha Cook EY Human Capital-Southeast Practice Leader

David Aronoff Flybridge General Partner


Today’s agenda

• CompStudy overview

• Current Founder’s Dilemmas research

• 2014 survey – company profiles

• Summary compensation data

• CEO compensation review

• Hot topics and current trends



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 2014:

Ability to filter Board of Directors data by company type and size

More granular industry categorizations

Enhanced company Scorecards

CompStudy Overview



The CompStudy.com Survey Data collected in every survey includes:

• Cash compensation and equity

• Founding team

• Financing history

• Company size

• Products/revenue

• Equity programs

• Executive backgrounds

• Board of directors

CompStudy Overview


Life Sciences Survey

2002 2014

168 cos. 222 cos.

Technology Survey

2000 2014

211 cos. 534 cos.


Today’s agenda








Most companies fail. It’s an unsettling fact for bright-eyed entrepreneurs, but old news to start-up veterans…

- New Venture Labs ”

“ ”

CAUSES OF FAILURE IN VC-BACKED VENTURES

Product devt. Functional mgmt.

Market probs.

35% 65%

PROBLEMS

Founding

Preparing Yourself

Building the Team

Beyond the Team

Exit Dilemmas

New-Venture Hiring

CORE DILEMMAS

Y

Y

Y

Y

Y

CORE FOUNDER

CO-FOUNDERS

INVESTORS, SUCCESSORS

ALL OF THE ABOVE

HIRES

16,000 founders

THE RESEARCH

6,300 startups

31,000 executives

Kaplan-Meier survival estimate95%, pointwise confidence band shown

l i ti0 50 100

0.00

0.25

0.50

0.75

1.00

.

111223318

7916525335 14 23

6323 4 4

45

3

2

# of months

Younger companies

Older companies

Full founder control

No founder control

Company value

• Detailed table of contents • Chapter 1 • Self-assessment survey • “When to Leap” video • Other awesome stuff

NoamWasserman.com


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. 43% B. 48% C. 9%



Today’s agenda









2014 Survey – Company Profiles

Number of full time employees

Headcount Institutional rounds raised

Number of rounds

Respondent companies were slightly earlier stage this year, due mostly to a lack of companies that have raised 5 or more rounds

% respondents in this range % respondents in this range

Companies cut by headcount are distributed approximately the same as they were in the 2013 survey.



2014 Survey – Company Profiles


Business Segments

Geography % respondents in this range

Revenue % respondents in this range


2014 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 2013



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. 0% B. 18% C. 64% D. 14% E. 5%



Today’s agenda









Compensation data

Founder CEOs didn’t see a change in target cash; their non-founder peers saw a modest 1.3% increase


Founder cash compensation *Not all positions shown due to lack of founders in certain roles*


CompStudy Overview Percentage growth in year-over-year non-founder total target cash compensation



Compensation data Cash compensation – non-founders, 2013 and 2014


Non-founder total target cash compensation was up 3% in 2014, a stronger bump than the 1.6% rate of increase between 2012 and 2013.


Compensation data Bonus as a percentage of base salaries – non-founders


% of base salary

On average in 2013, non-founder executives received 63.8% of their target bonuses, down slightly from 65.5% in 2012.


Audience Poll

What percentage of your full time employees (executives and non-executives) have received some form of equity grant?

A. Less than 25%

B. 26-50%

C. 51% – 75%

D. 76% – 99%

E. 100%




Compensation data Equity holdings – non-founder executives


Equity at hire - % of fully diluted shares

% equity owned, fully diluted

Current equity - % of fully diluted shares


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%




Compensation data

Equity holdings – type of equity vehicles used % of equity grants given by vehicle type



Compensation data Percentage of non-founder executives eligible for severance 63.2% of non-founder CEOs surveyed had some sort of severance package, right around the survey’s historical average of 62%.


% eligible for severance


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



Compensation data Boards of directors – average composition


Directors Chairpersons

% of total board seats


Compensation data External board members – current equity


% in this range


Today’s agenda









CEO compensation review

By number of financing rounds raised By number of full time employees

Non-founder CEO base (1,000s USD) For non-founder CEOs, the number of Full Time Employees a company has is a better predictor of base salary than is the number of financing rounds raised, particularly for smaller companies.



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 rounds raised. More filters can be applied at CompStudy.com

By number of financing rounds raised By number of full time employees



Today’s agenda









Hot topics and current

trends

• Recruiting and retaining top talent in an increasingly competitive market - Founder transitions - Recruiting dynamics - Retention issues

• The impact of a warm/hot IPO market on team dynamics and compensation

• Types of equity vehicles being used



Recap • 1-minute recap from each panelist

For more information, please visit www.compstudy.com.


http://www.compstudy.com/

Life Sciences Edition Executive Compensation · Executive Compensation: Insights from the 2014...

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