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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
www.compstudy.com | 3
Today’s presenters
Aaron Lapat Park Square Managing Partner
David Gammell WilmerHale Partner
Kimberly Wethly WilmerHale Partner
Presented by Park Square, WilmerHale and EY
Noam Wasserman Harvard Business School Associate Professor, Tukman Faculty Fellow
Martha Cook EY Human Capital-Southeast Practice Leader
David Aronoff Flybridge General Partner
www.compstudy.com | 4
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
Presented by Park Square, WilmerHale and EY
www.compstudy.com | 5
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
Presented by Park Square, WilmerHale and EY
www.compstudy.com | 6
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
Presented by Park Square, WilmerHale and EY
Life Sciences Survey
2002 2014
168 cos. 222 cos.
Technology Survey
2000 2014
211 cos. 534 cos.
www.compstudy.com | 7
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
Presented by Park Square, WilmerHale and EY
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
www.compstudy.com | 20
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%
Presented by Park Square, WilmerHale and EY
www.compstudy.com | 21
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
Presented by Park Square, WilmerHale and EY
www.compstudy.com | 22
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.
Presented by Park Square, WilmerHale and EY
www.compstudy.com | 23
2014 Survey – Company Profiles
Presented by Park Square, WilmerHale and EY
Business Segments
Geography % respondents in this range
Revenue % respondents in this range
www.compstudy.com | 24
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
Presented by Park Square, WilmerHale and EY
www.compstudy.com | 25
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%
Presented by Park Square, WilmerHale and EY
www.compstudy.com | 26
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
Presented by Park Square, WilmerHale and EY
www.compstudy.com | 27
Compensation data
Founder CEOs didn’t see a change in target cash; their non-founder peers saw a modest 1.3% increase
Presented by Park Square, WilmerHale and EY
Founder cash compensation *Not all positions shown due to lack of founders in certain roles*
www.compstudy.com | 28
CompStudy Overview Percentage growth in year-over-year non-founder total target cash compensation
Presented by Park Square, WilmerHale and EY
www.compstudy.com | 29
Compensation data Cash compensation – non-founders, 2013 and 2014
Presented by Park Square, WilmerHale and EY
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.
www.compstudy.com | 30
Compensation data Bonus as a percentage of base salaries – non-founders
Presented by Park Square, WilmerHale and EY
% of base salary
On average in 2013, non-founder executives received 63.8% of their target bonuses, down slightly from 65.5% in 2012.
www.compstudy.com | 31
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%
Webinar poll results: A. 16% B. 5% C. 1% D. 15% E. 63%
Presented by Park Square, WilmerHale and EY
www.compstudy.com | 32
Compensation data Equity holdings – non-founder executives
Presented by Park Square, WilmerHale and EY
Equity at hire - % of fully diluted shares
% equity owned, fully diluted
Current equity - % of fully diluted shares
www.compstudy.com | 33
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. 8% B. 24% C. 40% D. 5% E. 23%
Presented by Park Square, WilmerHale and EY
www.compstudy.com | 34
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 | 35
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%.
Presented by Park Square, WilmerHale and EY
% eligible for severance
www.compstudy.com | 36
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 | 37
Compensation data Boards of directors – average composition
Presented by Park Square, WilmerHale and EY
Directors Chairpersons
% of total board seats
www.compstudy.com | 38
Compensation data External board members – current equity
Presented by Park Square, WilmerHale and EY
% in this range
www.compstudy.com | 39
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
Presented by Park Square, WilmerHale and EY
www.compstudy.com | 40
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.
Presented by Park Square, WilmerHale and EY
www.compstudy.com | 41
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
Presented by Park Square, WilmerHale and EY
www.compstudy.com | 42
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
Presented by Park Square, WilmerHale and EY
www.compstudy.com | 43
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
Presented by Park Square, WilmerHale and EY
www.compstudy.com | 44
Recap • 1-minute recap from each panelist
For more information, please visit www.compstudy.com.
Presented by Park Square, WilmerHale and EY