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Executive Compensation: Insights from the 2013 CompStudy Survey
LIFE SCIENCES & HEALTHCARE EDITION
Life Sciences Edition
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www.compstudy.com | 2
Today’s moderator
Bryan Pearce Partner, Americas Director, EY
Entrepreneur of the Year, EY
Presented by Park Square, WilmerHale and EY
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www.compstudy.com | 3
Today’s presenters
Erik R. Lundh Park Square Managing Partner
Rosemary Reilly WilmerHale Partner
Kimberly Wethly WilmerHale Partner
Bruce Booth Atlas Ventures Partner
Presented by Park Square, WilmerHale and EY
Glen Giovannetti EY Global Life Sciences Sector Leader
Noam Wasserman Harvard Business School Associate Professor, Tukman Faculty Fellow
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www.compstudy.com | 4
Today’s agenda
• CompStudy overview
• Current Founder’s Dilemmas research
• 2013 survey – company profiles
• Summary compensation data
• CEO compensation review
• Hot topics and current trends
Presented by Park Square, WilmerHale and EY
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www.compstudy.com | 5
CompStudy Overview
Presented by Park Square, WilmerHale and EY
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 2013:
New options for filtering the data, including company valuation, profitability, CEO experience, and more
Enhanced Board of Directors reporting
Additional printable summary- level charts
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www.compstudy.com | 6
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
Presented by Park Square, WilmerHale and EY
Life Sciences Survey
2002 2013
168 cos. 256 cos.
Technology Survey
2000 2013
211 cos. 550 cos.
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www.compstudy.com | 7
Today’s agenda
• CompStudy overview
• Current Founder’s Dilemmas research
• 2013 survey – company profiles
• Summary compensation data
• CEO compensation review
• Hot topics and current trends
Presented by Park Square, WilmerHale and EY
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Founding
When to Found
Building the Team
Beyond the Team
Exit Dilemmas
New-Venture Hiring
CORE DILEMMAS
Y
Y
Y
Y
Y
CORE FOUNDER
CO-FOUNDERS
INVESTORS, PARTNERS
ALL OF THE ABOVE
HIRES
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16,000 founders
THE RESEARCH
6,300 startups
31,000 executives
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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
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http://techcrunch.com/2011/03/03/jack-dorsey-twitter-punched-stomach/
It was like being punched in the stomach. ” “
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“RICH VS. KING”
RICH
KING
Flop
Rich & King
Small Player
Big Player
Low High FINANCIAL GAINS
CON
TRO
L
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Value
Control
N=3,775 IT and LS startups, 2005-2012
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6% 15% 17%
14% 15% 15%
12% 4% 3%
Value
Control
N=3,775 IT and LS startups, 2005-2012
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For my part, I had rather be the first man among these [lesser] fellows, than the second man in Rome. ”
“
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05
101520253035
POST-SUCCESSION EXECUTIVE ROLES
05
101520253035
Source: Wasserman (2008), “Replacing the Founder,” 212 ventures .
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• Detailed table of contents • Chapter 1 • Self-assessment survey • “When to Leap” video • Other awesome stuff
NoamWasserman.com
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www.compstudy.com | 19
Audience Poll
Presented by Park Square, WilmerHale and EY
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. 44% B. 47% C. 9%
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www.compstudy.com | 20
Today’s agenda
• CompStudy overview
• Current Founder’s Dilemmas research
• 2013 survey – company profiles
• Summary compensation data
• CEO compensation review
• Hot topics and current trends
Presented by Park Square, WilmerHale and EY
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www.compstudy.com | 21
2013 Survey – Company Profiles
Number of full time employees
Headcount Institutional rounds raised
Number of rounds
Later stage companies are better-represented in this year’s survey; 82% of the companies surveyed have raised 2+ rounds of financing, compared to 78% in 2012.
% respondents in this range % respondents in this range
Respondent company headcounts were slightly larger than in 2012, though the distribution is fairly close.
Presented by Park Square, WilmerHale and EY
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www.compstudy.com | 22
2013 Survey – Company Profiles
Business Segments
Geography % respondents in this range
% respondents in this range
Revenue
Presented by Park Square, WilmerHale and EY
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www.compstudy.com | 23
2013 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 2012
Presented by Park Square, WilmerHale and EY
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www.compstudy.com | 24
Audience Poll
What change do you anticipate for base salaries next year?
A. Decrease
B. No change
C. Increase up to 5%
D. Increase between 5% and 10%
E. Increase more than 10%
Webinar poll results: A. 1% B. 17% C. 70% D. 9% E. 3%
Presented by Park Square, WilmerHale and EY
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www.compstudy.com | 25
Today’s agenda
• CompStudy overview
• Current Founder’s Dilemmas research
• 2013 survey – company profiles
• Summary compensation data
• CEO compensation review
• Hot topics and current trends
Presented by Park Square, WilmerHale and EY
![Page 26: View the Life Sciences Presentation Materials](https://reader034.vdocuments.mx/reader034/viewer/2022051103/58a2cc431a28abb5488bbf80/html5/thumbnails/26.jpg)
www.compstudy.com | 26
Compensation data Founder cash compensation
Founder CEO salaries were up slightly less than their non-founder peers: 0.9% vs 1.42%
Presented by Park Square, WilmerHale and EY
*Fewer positions shown due to lack of founders in certain roles
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www.compstudy.com | 27
Compensation data
Founder current equity holdings, as % of fully diluted shares
On the average, founders of life sciences companies hold significantly less equity than their technology peers – largely due to the more capital-intensive nature of most life sciences start-ups.
Presented by Park Square, WilmerHale and EY
% equity owned, fully diluted
*Fewer positions shown due to lack of founders in certain roles
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www.compstudy.com | 28
CompStudy Overview Percentage growth in year-over-year non-founder total target cash compensation
Presented by Park Square, WilmerHale and EY
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www.compstudy.com | 29
Compensation data Cash compensation – non-founders, 2012 and 2013 Non-founder total target cash compensation was up 3% in 2013, down slightly from the 3.5% rate of increase between 2011 and 2012.
Presented by Park Square, WilmerHale and EY
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www.compstudy.com | 30
Compensation data Bonus as a percentage of base salaries – non-founders On average in 2012, non-founder executives received 67.8% of their target bonuses, up slightly from 65.5% in 2011.
Presented by Park Square, WilmerHale and EY
% of base salary
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www.compstudy.com | 31
Compensation data
Current equity - % of fully diluted shares
Equity at hire - % of fully diluted shares
Equity holdings – non-founder executives
Presented by Park Square, WilmerHale and EY
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www.compstudy.com | 32
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. 29% B. 36% C. 20% D. 5% E. 9%
Presented by Park Square, WilmerHale and EY
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www.compstudy.com | 33
Compensation data
Equity holdings – type of equity vehicles used % of equity grants given by vehicle type
Presented by Park Square, WilmerHale and EY
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www.compstudy.com | 34
Compensation data Percentage of non-founder executives eligible for severance 67.3% 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.
Presented by Park Square, WilmerHale and EY
% eligible for severance
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www.compstudy.com | 35
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
Presented by Park Square, WilmerHale and EY
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www.compstudy.com | 36
Today’s agenda
• CompStudy overview
• Current Founder’s Dilemmas research
• 2013 survey – company profiles
• Summary compensation data
• CEO compensation review
• Hot topics and current trends
Presented by Park Square, WilmerHale and EY
![Page 37: View the Life Sciences Presentation Materials](https://reader034.vdocuments.mx/reader034/viewer/2022051103/58a2cc431a28abb5488bbf80/html5/thumbnails/37.jpg)
www.compstudy.com | 37
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 more highly correlated with company headcount, as evidenced in the chart above by the large gap in pay between CEOs at 1-20 FTE companies and CEOs at 21-40 FTE companies
Presented by Park Square, WilmerHale and EY
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www.compstudy.com | 38
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
Presented by Park Square, WilmerHale and EY
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www.compstudy.com | 39
Today’s agenda
• CompStudy overview
• Current Founder’s Dilemmas research
• 2013 survey – company profiles
• Summary compensation data
• CEO compensation review
• Hot topics and current trends
Presented by Park Square, WilmerHale and EY
![Page 40: View the Life Sciences Presentation Materials](https://reader034.vdocuments.mx/reader034/viewer/2022051103/58a2cc431a28abb5488bbf80/html5/thumbnails/40.jpg)
www.compstudy.com | 40
Hot topics and current
trends
• Recruiting and retaining top talent in an increasingly competitive market - Founder transitions - Recruiting dynamics - Retention issues
• Compensation differences between earlier and later stage companies
• Alternatives to dilutive equity issuances
• 409A Valuations
• Compensation in a holding company model
Presented by Park Square, WilmerHale and EY
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www.compstudy.com | 41
Recap • 1-minute recap from each panelist
Presented by Park Square, WilmerHale and EY