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Ok, it won't be terribly scientific or data driven or reliable beyond being a conversational starter, but, here is a method to determine what the CEO position could or should pay at a particular start up. (Blog Note to my current CEO's -- this posting is for entertainment purposes only).
We'll assume that the company is in a major metropolitan area in the United States and that the job in question relates to a recruited CEO. Founder CEO's would get plus or minus 20% of the numbers below. (This could be another blog post entirely but the discrepancy relates to a Founder's large equity position as a basis for lower compensation or irreplaceable status for higher compensation).
So here goes, base number is $100k if you've made at least twice that in a previous job. If one hasn't made twice that prior, taking a CEO job may not be the right next step.
Now, the adjustments, add $10k in annual salary for every million dollars in revenue above $3M if the company is not profitable. If the company is profitable, add $20k in annual salary for every million in revenue about 3 million. Bonus should be around 0 to 15% in an unprofitable company and 20 to 30% in a profitable company (especially if one was at the helm during a transition to profitable operations). One might ask about caps on these amounts, though I would argue that somewhere between $15M to $20M in annualized revenue -- the company is no longer a start up.
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WilmerHale, Ernst & Young and J. Robert Scott have produced a comprehensive study of C-Level executive salaries and bonuses, based on 340 start-ups in 2008. Contact Mike DiPierro of J. Robert
Scott at 617-563-2770 or mike.dipierro@fmr.com to obtain the unabridged results.
Posted by: Greg Elofson | November 06, 2009 at 10:03 AM