Study Shows Startup Executive Pay on the Mend

10/20/10

A study of private information technology and life sciences companies shows that tech executive pay is recovering from a dismal 2009. And it provides the public a rare glimpse at how much executives at startups are paid; that’s information privately held firms don’t have to divulge to the SEC, as public companies do.

The CompStudy—completed by the executive search firm J. Robert Scott, Ernst & Young, and academics at Harvard University—says that non-founding tech executives’ average base salaries rose 3.3 percent from 2009 to 2010. That’s an improvement from last year, when the annual raises that tech executives got were almost non-existent, in large part because of the poor economy.

“I think there’s some reason for optimism,” said Aaron Lapat, managing director of J. Robert Scott in Boston. “[But] companies are still taking a relatively conservative view on the market.”

This year’s study included compensation data from 560 tech firms and 190 life sciences companies in the U.S., the largest number of participants in the 11-year history of the study. (Read on for more detailed breakdowns of the 2010 data.) Last year executives’ pay raises hit a 10-year low, according to the study.

Life sciences executives made out even better than their tech counterparts this year, according to the study. Those from the non-founder pool of executives received 4.2 percent raises this year, compared with the 3.2 percent bump in pay they got last year. As has been true in previous years, life sciences executives also tend to get paid more than tech executives.

Among chief executives in the study, non-founding tech CEOs pulled in an average base salary of $235,000 in 2010, up from $230,000 last year. And non-founding life sciences chief executives saw their salaries rise from $277,000 to $288,000.

While founding CEOs made less than non-founders, according to the study, their equity stakes in their companies far exceeded those of chief executives who joined companies after they were launched. In tech, founding CEOs controlled 33.6 percent of their firm’s stock on average, compared with 6.4 percent among the non-founding set. From founder to non-founder CEOs in life sciences, the difference was less stark: 19.5 percent and 5.5 percent, respectively.

Here are some more interesting 2010 data points from the study:


Tech CEO average base salaries by region:

New England: $211,800

South: $198,000

Mid-Atlantic: $196,600

West: $195,400

California: $190,300

Midwest: $180,400


Editor’s note: J. Robert Scott’s Lapat said that CEO compensation depends more on the size of the company than the location of the firm. Also, the “West” region includes Washington State and Oregon, but obviously excludes California.


Tech CEO base salaries by sector:

Hardware/semiconductors: $210,400

Communications: $202,800

Clean technology: $201,800

Software: $192,800

IT services/consulting: $192,100

Digital media: $187,300


Life sciences CEO average base salaries by region:

New England: $277,000

Mid-Atlantic: $273,400

California: $264,800

Midwest: $247,400

West: $242,600

South: $238,100


Life sciences CEO base salaries by sector:

Therapeutics: $295,600

Devices: $245,600

Tools/instruments: $220,700

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