The Median Level of CEO Salaries at Exit

Recently we wrote a blog looking at the median level of founder ownership at 79 companies upon their exit/IPO (median is 11%, average is 17%).  We decided to dig deeper and look at the median level of CEO salaries.  Below we present the data for 73 publicly traded tech companies upon their exit/IPO.  A few observations really stand out to us:

    Year of Salary Bonus Options Total
Company CEO Filing Comp Comp Comp Comp
             
Software            
2U Christopher Paucek  2013 $300,000 $450,000 $4,086,606 $4,836,606
Acacia Murugesan Shanmugaraj 2016 $246,750 $122,045 $13,363 $382,158
Appfolio Brian Donahoo 2014 $250,000 $1,763,000 $369,000 $2,382,000
Athenahealth, Inc. Jonathan Bush 2007 $298,077 $0 $81,921 $379,998
Atlassian Scott Farquhar 2015 $264,862 $23,041 $0 $287,903
BazaarVoice Brett Hurt 2011 $250,000 $141,092 $0 $391,092
Benefitfocus, Inc. Shawn Jenkins 2013 $510,513 $0 $370,420 $880,933
Box Inc Aaron Levie 2014 $150,833 $38,750 $87 $189,670
BroadSoft, Inc.  Michael Tessler 2010 $276,058 $191,120 $493,176 $960,354
Castlight Health Giovanni Colella 2014 $200,000 $0 $41,661 $241,662
Cornerstone Adam Miller 2011 $310,000 $0 $3,664,591 $3,974,591
Cvent, Inc.  Rajeev Aggarwal 2013 $365,796 $97,020 $803 $463,619
Demandware Thomas Ebling 2012 $275,000 $0 $211,680 $486,680
Five9, Inc.  Michael Burkland 2014 $366,212 $49,462 $1,932,377 $2,348,051
HortonWorks Robert Bearden 2013 $166,667 $166,667 $727,292 $1,060,626
Hubspot Brian Halligan 2013 $238,183 $1,212 $132,376 $371,771
Instructure Joshua Coates 2015 $1 $0 $0 $1
Intralinks J. Andrew Damico 2010 $325,000 $227,000 $11,921 $563,921
Jive Software, Inc. Anthony Zingale 2011 $255,769 $0 $2,761,632 $3,017,401
Lifelock Todd Davis 2012 $408,462 $0 $239,277 $647,739
LinkedIn Jeffrey Weiner 2010 $250,000 $1,242 $211,055 $462,297
LivePerson Inc. Robert Loscascio 2000 $108,000 $50,000 $0 $158,000
LogMeIN, Inc. Michael Simon 2009 $265,000 $299,118 $72,686 $636,804
Marin Software Christopher Lien 2013 $275,000 $0 $2,735,708 $3,010,708
Marketo Phillip Fernandez 2012 $325,000 $308,750 $1,852,900 $2,486,650
Match Group Sam Yagan 2016 $500,000 $600,000 $3,719,992 $4,819,992
Medidata Solutions Tarek Sherif 2009 $360,000 $448,000 $58,136 $866,136
MindBody Richard Stollmeyer 2014 $360,000 $106,484 $699,668 $1,166,152
MobileIron, Inc. Robert Tinker 2014 $270,000 $0 $13,500 $283,500
Nant Health Patrick Soon Shiong 2016 $0 $0 $0 $0
Netsuite Zachary Nelson 2006 $300,000 $12,591 $143,000 $455,591
New Relic, Inc. Lewis Cirne 2014 $240,000 $127,435 $0 $367,435
Proofpoint, Inc. Gary Steele 2011 $300,000 $127,500 $816,884 $1,244,384
Qualys, Inc. Philippe Courtot 2012 $300,000 $103,500 $0 $403,500
RealPage, Inc. Stephen Winn 2010 $400,000 $250,440 $0 $650,440
RingCentral, Inc. Vladimir Schmunis  2013 $325,000 $146,453 $3,166,531 $3,637,984
SalesForce Marc Benioff 2003 $1 $0 $0 $1
Secureworks Michael Cote  2015 $456,924 $3,328,038 $0 $3,784,962
ServiceNow Frank Slootman 2011 $150,000 $116,218 $0 $266,218
Shopify Tobias Lutke 2015 $339,055 $0 $0 $339,055
Splunk Godfrey Sullivan 2011 $250,000 $500,000 $0 $750,000
SPS Commerce, Inc. Archie Black 2009 $276,000 $29,728 $103,406 $409,134
Textura Patrick Allin 2013 $455,000 $698,926 $677,899 $1,831,825
Twilio Jeff Lawson 2016 $299,783 $15,000 $1,938,769 $2,253,552
Ultimate Softare Scott Scherr 1998 $200,000 $0 $318,809 $518,809
Veeva Systems Inc. Peter Gassner 2013 $225,000 $0 $0 $225,000
WorkDay David Duffield 2012 $33,280 $1,500 $0 $34,780
Xactly Chris Cabrera 2015 $342,000 $124,231 $0 $466,231
Zendesk Mikkel Svane 2013 $200,000 $74,906 $0 $274,906
             
Payments            
Square Jack Dorsey 2016 $3,750 $0 $0 $3,750
             
Social            
Facebook Mark Zuckerburg 2012 $483,333 $220,500 $783,529 $1,487,362
Linkedin Jeffrey Weiner 2011 $250,000 $211,055 $1,242 $462,297
Twitter Dick Costolo 2013 $200,000 $0 $11,305,740 $11,505,740
             
Marketplaces            
Priceline Richard S. Braddock 1998 $112,500 $0 $5,000,000 $5,112,500
Sabre Tom Klein 2014 $711,923 $0 $3,724,632 $4,436,555
Shutterstock Jonathan Oringer 2012 $250,000 $0 $0 $250,000
Etsy Chad Dickerson 2015 $300,000 $247,500 $0 $547,500
Lending Club Renaud laplanche 2014 $314,583 $203,625 $0 $518,208
Angie's List William Oesterle 2011 $254,995 $1,440,847 $141,586 $1,837,428
Zillow Spencer M. Rascoff 2011 $215,780 $0 $351,200 $566,980
Groupon Andrew Mason 2011 $180,000 $0 $4,599 $184,599
GrubHub Matthew Maloney 2014 $265,000 $0 $417,827 $682,827
Care.com Sheila Marcelo 2013 $259,167 $125,000 $78,750 $462,917
             
Content Distributors            
Google Eric Schmidt 2004 $250,000 $301,556 $2,894 $554,450
Yelp Jeremy Stoppelman 2011 $220,000 $0 $0 $220,000
TrueCar Scott Painter 2014 $313,186 $231,918 $5,201,179 $5,746,283
Netflix Reed Hastings 2000 $12,698 $0 $1,550,000 $1,562,698
Pandora Joseph Kennedy 2011 $325,000 $175,000 $0 $500,000
             
Gaming            
Zynga Mark Pincus 2011 $301,154 $135,000 $0 $436,154
             
Hardware            
Fitbit James Park 2015 $222,179 $80,000 $7,542,446 $7,844,625
GoPro Nicholas Woodman 2014 $800,000 $1,003,200 $49,591 $1,852,791
TiVo Corporation Michael Ramsay 1999 $150,000 $0 $0 $150,000
Garmin Ltd Min Kao, Gary Burrell 2000 $166,270 $14,330 $51,879 $232,479
             
             
Median     $265,000 $50,000 $58,136 $518,809
Average     $271,572 $207,260 $929,784 $1,408,616

 

-Of the 73 companies, the median salary is $265,000 and the average is $271,572.  Indeed, in our own portfolio of 10 companies, we’ve seen salaries including bonus as low as $35,000 and as high as $350,000.  Have we seen a correlation between salary and performance in our portfolio? Actually no.  However, as investors do we scrutinize those CEO’s that take higher salaries and are we more critical of their mistakes? Absolutely, because the median of $265,000 is for tech startups who were very successful (they IPO’d), so if you’re anywhere near a salary of that level as a startup CEO, you have to be driving exciting growth while headed towards a fantastic exit.  If you’re getting paid a wonderful salary but the business is doing just OK or poorly, then you’re overpaid which is something your board won’t have much patience for. 

 

-Some of these CEOs take minimal salaries, sometimes as low as $1.  Joshua Coates of Instructure ($1) , Patrick Shiong of Nant Health ($0) , Marc Benioff of Salesforce ($1), Jack Dorsey of Square ($3,750), David Duffield of Workday ($33,280), and Reed Hastings of Netflix ($12,698) are all part of the club of CEOs that took very low salaries heading to their IPO.  Why did they do it? Well, aside from the fact that they could afford it, they did it because they wanted to set an example for the rest of the company.  By taking a low salary, the messages they’re conveying to employees and investors are: i) they believe in the value of their equity so cash means nothing to them; ii) and they’re frugal and treat the Company’s cash with respect, so employees should too.  Few qualitative factors are as attractive to investors as a CEO that takes a low salary to make a point, so if you can afford it and you believe in the company, we recommend it. 

 

-Before the IPO, some of the founders took options worth fantastic sums.  For instance, James Park of Fitbit ($7.5mm), Dick Costolo of Twitter ($11.3mm), and Scott Painter at True Car ($5.2mm), among others all took home nice option packages the year before IPO.  As a CEO, so long as you’re driving fantastic growth and value (which all 73 CEO’s were), it’s not out of line to expect additional option grants as a CEO.  It’s actually market, and good investors have no problem rewarding CEOs that are performing. 

 

-Salaries have gone up over time.  As the table below shows, the median level of CEO ownership has risen since 1998.  From 1998 to 2007, the median for each year averaged $156k.  From 2008 to 2016, the median averaged $283k.  It’s a good time to be the boss.  

 

  Year of Salary Bonus Options Total
MEDIANS BY YEAR Filing Comp Comp Comp Comp
  1998 $156,250 $0 $2,659,405 $2,815,655
  1999 $150,000 $0 $0 $150,000
  2000 $108,000 $14,330 $51,879 $232,479
  2001 --- --- --- ---
  2002 --- --- --- ---
  2003 $1 $0 $0 $1
  2004 $250,000 $301,556 $2,894 $554,450
  2005 --- --- --- ---
  2006 $300,000 $12,591 $143,000 $455,591
  2007 $298,077 $0 $81,921 $379,998
  2008 --- --- --- ---
  2009 $276,000 $299,118 $72,686 $636,804
  2010 $300,529 $209,060 $111,488 $607,181
  2011 $250,000 $127,500 $1,242 $500,000
  2012 $300,000 $1,500 $211,680 $486,680
  2013 $267,084 $85,963 $524,160 $970,780
  2014 $291,593 $77,973 $209,296 $924,490
  2015 $300,000 $80,000 $0 $466,231
  2016 $246,750 $15,000 $13,363 $382,158
           
Median after 2007   $283,797 $82,982 $92,087 $553,590
Median before 2007   $156,250 $0 $51,879 $379,998

 

Hopefully this article is helpful to you in thinking about where your salary is now and where it’s headed, and the message a high or low salary sends to investors and employees.  

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