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Private Equity and Venture Backed Executive Compensation packages Specifically in regards to equity ownership.
Hello! Thanks for your question regarding private equity and venture backed executive compensation packages. The short version is that the salary for founder CEOs in venture backed tech companies is estimated at $203,722 in 2017, whereas the salary for non-founder CEOs is estimated at $269,301. A more detailed account of the relevant information has been presented in the attached spreadsheet for your convenience. Below is a deep dive of my research and findings.
$203,722 for founders and $207,768 for non-founders.
Methodology
I have found statistics for executive compensation in the technology sector. I found generalized statistics for CEOs and other specified statistics for founder and non-founder executives. I was also able to find data for executive compensation in venture backed tech companies. I have incorporated the information in the write-up, however, a more detailed account of the data has been incorporated into a spreadsheet for your convenience.
Executive Compensation Packages
The median salary for Chief Executive Officers in the US is $162,955 with $146,000 bonuses and $118,000 profit sharing proceeds.
Companies other than "larger private companies", "private equity- and venture capital-owned companies", and "employee-owned companies" are not up to the mark when it comes to following best practices for "motivating CEOs and other senior executives". Also, only 23.5% companies confer performance-based compensation as compared to time-based compensation, which is not consistent with "public company practices".
Companies with smaller revenues tend to ignore annual incentive plans, which is against the best practices for public companies. Only 26% companies with revenues less than $2 million, 26% companies with revenues between $2 and 4.9 million, 29% companies with revenues between $5 million and $9.9 million have annual incentive plans.
The highest compensation for Chief Financial Officers in 2016 was for Tech companies valuing at $575,000.
S&P 500 companies have seen a 16.9% increase in "reported CEO pay" from 2011 to 2015, which equates to a 3.98% CAGR.
86% of public company participants in a survey received some sort of "stock-based incentive compensation, whereas the number was only 41% for private companies.
There has been a 0.4% growth in Q2 2017, a 2.1% year over year growth in 2017, and a 12.3% growth since 2006 in wages in tech companies.
According to a 2014 survey of venture backed tech companies, the base salary for founder CEOs increased from $178,500 in 2013 to $187,400 in 2014. Percentage growths in "year-over-year non-founder total target cash compensation" were 3.3% in 2010, 3.7% in 2011, 4.8% in 2012, 1.6% in 2013, and 3.0% in 2014. Base salary for non-founder CEOs increased from $242,000 in 2013 to $242,900 in 2014. The equity holdings for non-founder executives in 2014 increased to 5.1% (median) and 7.6% (mean) of fully diluted shares as compared to 5% (median) and 6.7% (mean) at the time of hire. 33.2% used incentive options, 26.7% used mixed options, 19.3% used other options, 9.6% used common stock, 8.7% used restricted stock units, and 2.5% used non-qualified options to provide equity grants in 2014. "63.2% of non-founder CEOs had some sort of severance package" with 6 months (median) and 7 months (mean) length.
The median cash compensation for founder CEOs in the technology sector in 2014 included a base salary of $183,750 and a total target pay of $200,000, while they held a median equity compensation of 16.91% of fully diluted shares. The median cash compensation for non-founder CEOs in the technology sector in 2014 included a base salary of $275,000 with a total target pay of $380,550, while they held a median equity compensation of 5.05% of fully diluted shares.
Data from 2014, however, is a bit too old to still be relevant for your purposes. However, I couldn't find solid data on more recent averages specific to CEOs in the tech industry. That said, I did find the average growth rate for salaries in the tech industry for the last few years, so we can make some estimates:
Non-Founder CEO: $251,644 + 3.9% = $261,458
Founder CEO: $190,365 + 3.9% = $197,789
Non-Founder CEO: $261,458 + 3% = $269,301
Founder CEO: $197,789 + 3% = $203,722
In other words, average CEO base salary for the tech industry for 2017 are an estimated $203,722 for founders and $269,301 for non-founders.
Summary
To wrap it up, the salary for founder CEOs in venture backed tech companies is estimated at $203,722 in 2017, whereas the salary for non-founder CEOs is estimated at $269,301. A more detailed account of the relevant information has been presented in the attached spreadsheet for your convenience.
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