Know What Your Tech and Life Sciences Executive Peers Are Paid? Compensation Study Tells All—Plus New Insights on Clean-Tech CEO Pay

11/14/08

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Bonuses. For those who get them—and for those of us who recall Clark Griswold freak over his jelly-of-the-month club “bonus” in National Lampoon’s Christmas Vacation—bonuses can add a potent kick to the compensation cocktail. Indeed, one of the highlights in both the life sciences and IT reports was a trend toward “pay for performance,” with a higher percentage of employees across the board in both camps eligible for bonuses in 2008 compared to 2007. And good news on this front for tech CEOs, for which the study shows an increase in target bonuses from $98,000 in 2007 to $102,000 in 2008, and these executives received an average of 71 percent of their bonuses last year. But the bonus outlook grew dimmer for life sciences CEOs, whose average target bonuses were down from $96,000 last year to $92,000 in 2008, and the average bonus attainment rate was 69 percent in 2007. Points here go to tech chief executives.

Equity, of course, is key—especially for the executive who thinks that his or her firm has the cure for cancer or the next iPhone under development. But equity appears to be harder to come by nowadays for IT CEOs. Non-founder tech chiefs had average equity of 5.46 percent in 2008, down from 5.7 percent last year. Even founding CEOs in tech saw their stakes dwindle this year, from an average of 24.79 percent in 2007 to 22.05 percent this year. The average equity of non-founder life sciences executives was up from 5.48 percent last year to 5.59 percent in 2008. The big winners in this category were founding life sciences CEOs, whose average equity rose from 13.37 percent last year to 17.12 percent in 2008.

Here’s a grab bag of other observations from the reports:

—The average CEO severance package in technology is 7.4 months. Their life sciences counterparts have a median severance package of 12 months (I didn’t see an average in there).

—In the life sciences report, there was an interesting Q&A with John Maraganore, CEO of Cambridge, MA-based RNA-interference drug developer Alnylam Pharmaceuticals (NASDAQ:ALNY). Here’s part of his response to a question about whether the M&A option is on the table for his company: “We have had options in our history to make a quick buck,” Maraganore says. “We have built the foundation to do that but aren’t taking that route.”

—In a similar interview in the tech report, Clinton Bybee, co-founder and managing director of venture firm Arch Venture Partners in Seattle, has this to say to a question about what makes a good chief executive in an emerging business: “I don’t know that there is one answer,” Bybee says. “Two very good models that work are, one, ‘done it before,’ or two, ‘you know the industry cold.’”

—New England life sciences CEOs, with average total cash compensation (base salary and bonus) of $422,000, are the highest paid chief executives in the country. Below are full lists.

2008 CEO Cash Compensation (base salary and bonus) By Business Segment:

Life sciences—$410,000
Medical devices—$371,000
Content, information provider—$364,000
Software—$350,000
Services, consulting, integration—$336
Communications—$328,000
Clean technology—$321,000
Hardware, semiconductors, electronics—$315,000

2008 CEO Cash Compensation (base salary and bonus) by Geography

Life sciences/medical devices

New England—$422,000
California—$404,000
Mid-Atlantic—$376,000
South—$337,000
Midwest—$247,000
West—(sample size too small)

Technology

Midwest—$358,000
South—$351,000
California—$345,000
New England—$343,000
Mid-Atlantic—$327,000
West—$322,000

As for next year’s compensation data, let’s keep our fingers crossed for positive results.

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