Executive Compensation Flat at Private Technology Companies, CEO Salaries and Bonuses Down
-J. Robert Scott and Ernst & Young LLP release 10th annual compensation and entrepreneurship report-
BOSTON, Dec. 1 /PRNewswire/ -- For the first time in 10 years, C-suite executives at technology companies saw their 2009 total cash compensation target remain flat with the prior year, while comparable executives at life sciences firms experienced an average increase of 3.5 percent in total cash target compensation year over year, according to a compensation study of private businesses released today.
The 10th annual Compensation and Entrepreneurship study conducted by J. Robert Scott and Ernst & Young LLP in collaboration with Professor Noam Wasserman at Harvard Business School, revealed that average base salaries for CEOs at the nearly 500 emerging, private technology firms totaled $231,000, compared to $230,000 in 2008. The study found that the heads of business development and marketing at technology companies saw their total cash compensation target decline by 3.6 percent in 2009 compared to 2008.
The study also examined bonuses received in 2008. CEOs at the technology firms received 64 percent of their target bonus or an average of $61,000 in 2008, representing a 6 percent decrease of total bonus attainment compared to 2007.
Among the more than 200 emerging, private life sciences firms surveyed, CEOs attained an average base salary of $273,000, up 3.2 percent from 2008. CEOs at these life sciences firms received average bonuses of $48,000 in 2008 or 44 percent of their target bonus, down from 73 percent in 2007.
"This is the first time in 10 years of conducting the study that we have seen anything other than an increase in technology executive total cash compensation. In fact, the average increase over the past nine years has been five percent annually," said Aaron Lapat, managing director, J. Robert Scott. "Even though CEO bonuses across both sectors were lower than the prior year, the fact that these executives still received bonus payouts may speak to the confidence these companies have in their leadership and future growth. In terms of private life sciences companies, these executives may have experienced an increase in base salary because their compensation tends to be based more on clinical milestones. Clearly, the economy is driving change at these organizations."
"These executive compensation results reflect the greater focus on capital efficiency and company performance that is especially important in current economic conditions -- but for entrepreneurs and venture capital investors there remain many opportunities to form and grow a business because quality talent is currently available at very competitive compensation levels," stated Bryan Pearce, Ernst & Young LLP, Americas Director, Venture Capital Advisory Group.
The study is the most comprehensive survey of executive compensation among privately-held, emerging technology and life sciences companies and the first to make this information readily available. The survey results are used as an authoritative guide by venture capital firms and their portfolio companies in making critical decisions regarding attracting, rewarding and retaining key talent. Study results are available at www.compstudy.com and will be explained in detail during an interactive webcast on December 3 at 11 a.m. by leading venture capitalists and executives at J. Robert Scott and Ernst & Young LLP. Webcast participants will discuss how the life sciences and technology companies have reacted to the state of the economy, and what the future might hold for these VC-backed companies. To register for the webcast, visit http://compstudy.com/about-us/blog/webinar2009 .
Methodology
More than 700 privately-held, emerging technology and life sciences companies throughout the United States took part in the survey which delved into the compensation, bonus and equity packages of 13 key top executive positions, including Chief Executive Officer, President/Chief Operating Officer, Chief Financial Officer, among others. Data is analyzed in aggregate with detailed views by position looking at: industry vertical, product stage, revenue, headcount, geography, founder status and financing stage. Nearly 85 percent of the surveyed companies have less than 75 employees.
J. Robert Scott
J. Robert Scott is a boutique, global retainer-based executive search firm. Ranking as the 16th largest search firm in the United States, the firm specializes in recruiting senior level executives for a wide array of companies in the financial services, technology, life science/healthcare and higher education/not-for-profit fields. With headquarters in Boston, the firm has offices in San Francisco, Hong Kong, Singapore and London. Additional information about the firm can be found at www.j-robert-scott.com.
About Ernst & Young
Ernst & Young is a global leader in assurance, tax, transaction and advisory services. Worldwide, our 144,000 people are united by our shared values and an unwavering commitment to quality. We make a difference by helping our people, our clients and our wider communities achieve their potential. For more information, please visit www.ey.com.
Ernst & Young refers to the global organization of member firms of Ernst & Young Global Limited, each of which is a separate legal entity. This news release has been issued by Ernst & Young LLP, a U.S. client-serving member firm of Ernst & Young Global Limited.
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Aaron Lapat
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