Life Sciences Edition
Executive Compensation:
Insights from the 2014 CompStudy Survey
of Venture-Backed Companies
TECHNOLOGY EDITION
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 | 2
Today’s
presenters
David Aronoff
Martha Cook
David Gammell
Flybridge
General Partner
EY
Human Capital-Southeast
Practice Leader
WilmerHale
Partner
Aaron Lapat
Noam Wasserman
Kimberly Wethly
Park Square
Managing Partner
Harvard Business School
Associate Professor,
Tukman Faculty Fellow
Presented by Park Square, WilmerHale and EY
WilmerHale
Partner
www.compstudy.com | 3
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 | 4
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 2014:
 Ability to filter Board of Directors
data by company type and size
 More granular industry
categorizations
 Enhanced company Scorecards
Presented by Park Square, WilmerHale and EY
www.compstudy.com | 5
CompStudy
Overview
Technology Survey
2000
2014
211 cos.
534 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.
2014
222 cos.
• Executive backgrounds
• Board of directors
Presented by Park Square, WilmerHale and EY
www.compstudy.com | 6
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 | 7
“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
CORE DILEMMAS
Founding
HIRES
Exit
Dilemmas
Y
COFOUNDERS
Beyond
the Team
Y
New-Venture
Hiring
Y
Y
CORE
FOUNDER
Building
the Team
Y
Preparing
Yourself
INVESTORS, ALL OF THE
SUCCESSORS
ABOVE
THE RESEARCH
6,300 startups
16,000 founders
31,000 executives
Kaplan-Meier survival estimate
95%, pointwise confidence band shown
11
1
22
33
18
79
165
253
35
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
Younger
companies
Older
companies
No founder
control
Full 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%
Presented by Park Square, WilmerHale and EY
www.compstudy.com | 20
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 | 21
2014 Survey – Company Profiles
Institutional rounds raised
Headcount
Respondent companies were slightly earlier
stage this year, due mostly to a lack of
companies that have raised 5 or more rounds
Companies cut by headcount are distributed
approximately the same as they were in the
2013 survey.
% respondents in this range
% respondents in this range
Number of rounds
Number of full time employees
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2014 Survey – Company Profiles
Geography
Revenue
% respondents in this range
% respondents in this range
Business Segments
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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 | 24
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%
Presented by Park Square, WilmerHale and EY
D. 14%
E. 5%
www.compstudy.com | 25
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 | 26
Compensation data
Founder cash compensation
*Not all positions shown due to lack of founders in certain roles*
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
www.compstudy.com | 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
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.
Presented by Park Square, WilmerHale and EY
www.compstudy.com | 29
Compensation data
Bonus as a percentage of base salaries – non-founders
On average in 2013, non-founder executives received 63.8% of their target bonuses, down slightly
from 65.5% in 2012.
% of base salary
Presented by Park Square, WilmerHale and EY
www.compstudy.com | 30
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%
Presented by Park Square, WilmerHale and EY
D. 15%
E. 63%
www.compstudy.com | 31
Compensation data
Equity holdings – non-founder executives
% equity owned, fully diluted
Current equity - % of fully diluted shares
Equity at hire - % of fully diluted shares
Presented by Park Square, WilmerHale and EY
www.compstudy.com | 32
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%
Presented by Park Square, WilmerHale and EY
D. 5%
E. 23%
www.compstudy.com | 33
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 | 34
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
Presented by Park Square, WilmerHale and EY
www.compstudy.com | 35
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
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Compensation data
Boards of directors – average composition
% of total board seats
Directors
Chairpersons
Presented by Park Square, WilmerHale and EY
www.compstudy.com | 37
Compensation data
External board members – current equity
% in this range
Presented by Park Square, WilmerHale and EY
www.compstudy.com | 38
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 | 39
CEO compensation review
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.
By number of financing rounds raised
By number of full time employees
Presented by Park Square, WilmerHale and EY
www.compstudy.com | 40
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 | 41
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 | 42
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 | 43
Recap
•
1-minute recap from each panelist
For more information, please visit
www.compstudy.com.
Presented by Park Square, WilmerHale and EY
www.compstudy.com | 44