life sciences edition executive compensation · and current trends • recruiting and retaining top...

Executive Compensation: Insights from the 2014 CompStudy Survey of Venture-Backed Companies

LIFE SCIENCES EDITION

Life Sciences Edition

www.compstudy.com | 2

Today’s moderator

Presented by Park Square, WilmerHale and EY

Bryan Pearce Global Leader | EY Entrepreneur Of The Year™ and Venture Capital


Today’s presenters

Erik R. Lundh Park Square Managing Partner

Noam Wasserman Harvard Business School Associate Professor, Tukman Faculty Fellow

Kimberly Wethly WilmerHale Partner


Rosemary Reilly WilmerHale Partner

William P. Murphy Ernst & Young Principal

Tom Flynn SV Life Sciences Managing Partner


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



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


The CompStudy.com Survey Data collected in every survey includes:

• Cash compensation and equity

• Founding team

• Financing history

• Company size

• Products/revenue

• Equity programs

• Executive backgrounds

• Board of directors

CompStudy Overview


Life Sciences Survey

2002 2014

168 cos. 222 cos.

Technology Survey

2000 2014

211 cos. 534 cos.


Today’s agenda








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

Founding

Preparing Yourself

Building the Team

Beyond the Team

Exit Dilemmas

New-Venture Hiring

CORE DILEMMAS

Y

Y

Y

Y

Y

CORE FOUNDER

CO-FOUNDERS

INVESTORS, SUCCESSORS

ALL OF THE ABOVE

HIRES

16,000 founders

THE RESEARCH

6,300 startups

31,000 executives

Kaplan-Meier survival estimate95%, pointwise confidence band shown

l i ti0 50 100

0.00

0.25

0.50

0.75

1.00

.

111223318

7916525335 14 23

6323 4 4

45

3

2

# of months

Younger companies

Older companies

Full founder control

No 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. 52% B. 41% C. 7%


Today’s agenda








www.parksquare.com | 22

2014 Survey – Company Profiles

Number of full time employees

Headcount Institutional rounds raised

Number of rounds

This is the first year companies with no institutional money raised have comprised more than 10% of the study cohort

% respondents in this range % respondents in this range

There were more companies with 1-20 FTEs this year; 70.6% vs 61.6% last year



2014 Survey – Company Profiles

Business Segments

Geography % respondents in this range

% respondents in this range

Revenue



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



Audience Poll

What change do you anticipate for base salaries next year?

A. Decrease greater than 5%

B. Decrease up to 5%

C. No change

D. Increase up to 5%

E. Increase over 5%

Webinar poll results: A. 0% B. 0% C. 13% D. 78% E. 9%



Today’s agenda









Compensation data Founder cash compensation

Founder CEO salaries were up 3.5%, in line with the 3.3% increase for their non-founder peers


*Fewer positions shown due to lack of founders in certain roles


CompStudy Overview Percentage growth in year-over-year non-founder total target cash compensation



Compensation data Cash compensation – non-founders, 2013 and 2014 Non-founder total target cash compensation was up 4.2% in 2014, up from the 3% increase between 2012 and 2013. It also beat out non-founder CEOs at technology companies, whose cash compensation increased 3% in 2014.



Compensation data Bonus as a percentage of base salaries – non-founders On average in 2013, non-founder executives received 69.7% of their target bonuses, up slightly from 67.8% in 2012, and above the historical average of 66%.


% of base salary


Compensation data

Current equity - % of fully diluted shares

Equity at hire - % of fully diluted shares

Equity holdings – non-founder executives



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. 28% B. 38% C. 28% D. 0% E. 7%



Compensation data

Equity holdings – type of equity vehicles used % of equity grants given by vehicle type



Compensation data Percentage of non-founder executives eligible for severance 67.5% of non-founder CEOs surveyed had some sort of severance package, down from the survey’s historical average of 73%. No other position exceeded 50% participation.


% eligible for severance


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



Compensation data Boards of directors – average composition

Directors Chairpersons

% of total board seats



Compensation data External board members – current equity

% in this range



Today’s agenda









CEO compensation review

By number of financing rounds raised By number of full time employees

Non-founder CEO base (1,000s USD) CEO salaries are most highly correlated with the number of rounds raised and headcount for the median CEO. At the top end, company size and maturity appear to have little effect on cash comp.



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 status. This is partly attributable to difference between therapeutics companies and all others in the survey; more filters can be applied at CompStudy.com

By number of financing rounds raised By number of full time employees



Today’s agenda









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 hot IPO market on team dynamics and compensation

• Trends in equity vehicles being used, and the impact on compensation at exit



Recap • 1-minute recap from each panelist

For more information, please visit www.compstudy.com.


http://www.compstudy.com/

life sciences edition executive compensation · and current trends • recruiting and retaining top...

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