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

Visit www.compstudy.com and register to receive full access

Special Access Code

Abbreviated Edition

A SERVICE FROMPARK SQUARE

EXECUTIVE SEARCH

technology 2013

www.compstudy.com© Copyright 1999-2013, Park Square Executive Search LLC. All Rights Reserved

cs2013tech

Sponsored By:

2013 Compensation & Entrepreneurship Report in Technology2013 Compensation & Entrepreneurship Report in Technology

www.compstudy.com | www.parksquare.comwww.compstudy.com | www.parksquare.com# #

TABLE OF CONTENTS

Demographics 3

Cash Compensation 4

Equity and Severance 5

CEO Compensation by Headcount 6

Founder Compensation and Sponsor Information 7

Founder Compensation and Sponsor Information

7

Sponsor Information

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.

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.

www.ey.com

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

17 16.3

USD 1,000’s

$0

$50

$100

$150

$200

$250

$300

$350

240.6

182.8191.3

206.6

34.5

260

164.7 164.7

192.8174.6 180.8

18.5

152.3 148.7

47.8

64.826.3

30.8

199.5

51.936.9

19.5

35.326

72

257.5

28

205.4

83.8

29.6

19

2419.3

63.4

57

34.9

87.5

248.4

2012 Base Salary 2012 Bonus Received 2012 Unachieved Bonus 2013 Base Salary 2013 Target Bonus

CEO Head ofFinance/CFO

Head ofBus Dev/CBO

Head ofClinical Research

Head ofRegulatory Affairs

Research &Develop/CSC

Head ofPlatform Tech/CTO

Head ofEngineering

9.36

Founder Total Cash

• Founder CEOs received a more substantial raise than their non-founder peers: 2.5% vs 0.8%.

Founder Equity Holdings

• 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.

Founder Cash CompensationLetter to the Industry

On behalf of Park Square Executive Search, EY, WilmerHale, and Professor Noam

Wasserman of Harvard Business School, I’d like to welcome you to the 2013 edition

of our annual Compensation and Entrepreneurship Report in Technology. This

report—our fourteenth annual and largest to date—includes summaries and analysis

of compensation data collected from executives at more than 550 private companies

from across the country in software, hardware, content, clean tech and other

industries. The survey data for this edition were collected between May and August

of 2013.

This survey responds to our clients’ continuing need for better access to reliable,

comparable compensation data to assist them in the critical decisions involved in

attracting, motivating and retaining key executives at private companies.

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-

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

free of charge to survey participants and is also available as a paid subscription.

Thanks for reading,

Aaron Lapat

Managing Partner

Park Square Executive Search



Geography Financing Rounds Raised

Business Segment Headcount by Number of Full-Time Employees

28.2

15.1

12.2

11.3

7.6

25.6

% respondents in this range

California

New England

Mid Atlantic

Midwest

West

South

9.2

1.5 3

3.9

8

14

7.5

52.9


Software

Communications

Hardware/Semi

IT Services/Consulting

Digital Media/Content/Information

Clean Tech

Healthcare IT

Other

0

10

20

30

40

50

44.9

14.42218.8


1–20 21–40 41–75 76+

0

5

10

15

20

25

17

22.3

16.311.6 11.8

21


0 1 2 3 4 5 or more

0%

2%

4%

6%

8%

10%

12%

14%

% F

ully

Dilu

ted

Sha

res

50th25th Mean 75th

51–20 FTEs 6.2 10.4 11.6

3.621–40 FTEs 5 5.3 7.4

3.741+ FTEs 5 5.3 6.2

$0

$50

$100

$150

$200

$250

$300

$350

1,00

0’s

US

D

50th25th Mean 75th

123.81–20 FTEs 181.5 183.7 226.3

22521–40 FTEs 250 260.7 289

24541+ FTEs 275 281.5 306 The geographic distribution in 2013 closely mirrors venture capital funding trends, and the universe of private companies at large.

Screenshot of online reporting tool

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.

Software companies continue to make up half of the population; Clean Tech has been the fastest-growing segment over the past three years.

Respondent company headcounts were distributed similarly to those in the 2012 survey, with a slightly higher percentage of large companies this year.

CEO Compensation by Headcount

Equity: By Number of Full-time Employees

Base Salary: By Number of Full-time Employees

Demographics

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.

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.

36

Slice this data yourself at www.compstudy.com



Cash Compensation Equity and Severance

17

11.6 11.8

USD 1,000’s

$0

$50

$100

$150

$200

$250

$300

$350

$400

250

182189

177185

172179

165 169 173 178164

174 176

142 142 158 161188 190

5434

31

483935 43

7

8451

33

168

5627

26

11581

33

48

281956

41

166341

1749

2376

83

54

131

CEO COO Head ofFinance/CFO

Head ofTech/CTO

Head ofEngineering

Head ofSales

Head ofMarketing

Head ofBus Dev/CBO

Head ofHR

Head ofProf Svcs

GeneralCounsel

259

8


17

% equity owned, fully diluted

0

1

2

3

4

5

6

7

8

22.6

0.9 1

2.6

1 1.2 1 1.20.6 0.8 0.7

1.10.5

0.91.1

5


Head ofTech/CTO

Head ofEngineering

Head ofSales

Head ofMarketing

Head ofBus Dev/CBO

Head ofHR

Head ofProf Svcs

GeneralCounsel

6.2

2013 Median 2013 Mean

0.1 0.2 0.2 0.3

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.

• 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.

• 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.

• On average in 2012, non-founder executives received 65.5% of their target bonuses, up from 60.3% in 2011.

• 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.

17 16.3

11.6

% of base salary

0%

10%

20%

30%

40%

50%

60%

70%

31.125.7

38.7

22.2

31.922.3 28

16.225.3

45.8

15.8

27.1

48

22.526 22.9

28.4

17.721.6

16.154.8

17.4

31.8

14.9

63.3

18.6

11

8.69.4

12.1

20


Head ofTech/CTO

Head ofEngineering

Head ofSales

Head ofMarketing

Head ofBus Dev/CBO

Head ofHR

Head ofProf Svcs

GeneralCounsel

46.3

2012 Bonus Received 2012 Unachieved Bonus 2013 Target Bonus

17

% eligible for severance

0

10

20

30

40

50

60

70

80

33.326.3

18.1

2621

16.8

25 26.234.333.9


Head ofTech/CTO

Head ofEngineering

Head ofSales

Head ofMarketing

Head ofBus Dev/CBO

Head ofHR

Head ofProf Svcs

GeneralCounsel

63.5

Total Cash Compensation: Non-Founders Equity Holdings

Bonus as a Percentage of Base Salary Severance Eligibility

54



Geography Financing Rounds Raised

Business Segment Headcount by Number of Full-Time Employees

28.2

15.1

12.2

11.3

7.6

25.6


California

New England

Mid Atlantic

Midwest

West

South

9.2

1.5 3

3.9

8

14

7.5

52.9


Software

Communications

Hardware/Semi

IT Services/Consulting

Digital Media/Content/Information

Clean Tech

Healthcare IT

Other

0

10

20

30

40

50

44.9

14.42218.8


1–20 21–40 41–75 76+

0

5

10

15

20

25

17

22.3

16.311.6 11.8

21


0 1 2 3 4 5 or more

0%

2%

4%

6%

8%

10%

12%

14%

% F

ully

Dilu

ted

Sha

res

50th25th Mean 75th

51–20 FTEs 6.2 10.4 11.6

3.621–40 FTEs 5 5.3 7.4

3.741+ FTEs 5 5.3 6.2

$0

$50

$100

$150

$200

$250

$300

$350

1,00

0’s

US

D

50th25th Mean 75th

123.81–20 FTEs 181.5 183.7 226.3

22521–40 FTEs 250 260.7 289

24541+ FTEs 275 281.5 306 The geographic distribution in 2013 closely mirrors venture capital funding trends, and the universe of private companies at large.

Screenshot of online reporting tool

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.

Software companies continue to make up half of the population; Clean Tech has been the fastest-growing segment over the past three years.

Respondent company headcounts were distributed similarly to those in the 2012 survey, with a slightly higher percentage of large companies this year.

CEO Compensation by Headcount

Equity: By Number of Full-time Employees

Base Salary: By Number of Full-time Employees

Demographics

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.

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.

36

Slice this data yourself at www.compstudy.com



TABLE OF CONTENTS

Demographics 3

Cash Compensation 4

Equity and Severance 5

CEO Compensation by Headcount 6

Founder Compensation and Sponsor Information 7

Founder Compensation and Sponsor Information

7

Sponsor Information

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.

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.

www.ey.com

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

17 16.3

USD 1,000’s

$0

$50

$100

$150

$200

$250

$300

$350

240.6

182.8191.3

206.6

34.5

260

164.7 164.7

192.8174.6 180.8

18.5

152.3 148.7

47.8

64.826.3

30.8

199.5

51.936.9

19.5

35.326

72

257.5

28

205.4

83.8

29.6

19

2419.3

63.4

57

34.9

87.5

248.4


CEO Head ofFinance/CFO

Head ofBus Dev/CBO

Head ofClinical Research

Head ofRegulatory Affairs

Research &Develop/CSC

Head ofPlatform Tech/CTO

Head ofEngineering

9.36

Founder Total Cash

• Founder CEOs received a more substantial raise than their non-founder peers: 2.5% vs 0.8%.

Founder Equity Holdings

• 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.

Founder Cash CompensationLetter to the Industry

On behalf of Park Square Executive Search, EY, WilmerHale, and Professor Noam

Wasserman of Harvard Business School, I’d like to welcome you to the 2013 edition

of our annual Compensation and Entrepreneurship Report in Technology. This

report—our fourteenth annual and largest to date—includes summaries and analysis

of compensation data collected from executives at more than 550 private companies

from across the country in software, hardware, content, clean tech and other

industries. The survey data for this edition were collected between May and August

of 2013.

This survey responds to our clients’ continuing need for better access to reliable,

comparable compensation data to assist them in the critical decisions involved in

attracting, motivating and retaining key executives at private companies.

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-

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

free of charge to survey participants and is also available as a paid subscription.

Thanks for reading,

Aaron Lapat

Managing Partner

Park Square Executive Search

Visit www.compstudy.com and register to receive full access

Special Access Code

Abbreviated Edition

A SERVICE FROMPARK SQUARE

EXECUTIVE SEARCH

technology 2013

www.compstudy.com© Copyright 1999-2013, Park Square Executive Search LLC. All Rights Reserved

cs2013tech

Sponsored By:

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

Business

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