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Abbreviated Edition

technology

2013

Special Access Code

cs2013tech

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2013 Compensation & Entrepreneurship Report in Technology

TABLE OF CONTENTS
Demographics 3 Cash Compensation Equity and Severance CEO Compensation by Headcount 4 5

Letter to the Industry

On behalf of Park Square Executive Search, EY, WilmerHale, and Professor Noam Wasserman of Harvard Business School, Id like to welcome you to the 2013 edition of our annual Compensation and Entrepreneurship Report in Technology. This reportour fourteenth annual and largest to dateincludes summaries and analysis of compensation data collected from executives at more than 550 private companies 6 from across the country in software, hardware, content, clean tech and other industries. The survey data for this edition were collected between May and August of 2013. This survey responds to our clients continuing need for better access to reliable, comparable compensation data to assist them in the critical decisions involved in attracting, motivating and retaining key executives at private companies. We are able to present correlations between executive compensation and a number of variables, including: nancing stage, company size both in terms of product stage and headcount, founder/non-founder status, industry segment and geography. We also provide a number of analytics on Board of Directors compensation and makeup, company equity plans, and a look at how organizations develop as they raise additional nancing. This summary document provides only high level excerpts from the detailed analysis available on-line at www.compstudy.com. Complete access to the data is available free of charge to survey participants and is also available as a paid subscription.

Founder Compensation and Sponsor Information 7

Thanks for reading, Aaron Lapat Managing Partner Park Square Executive Search

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2013 Compensation & Entrepreneurship Report in Technology

Demographics
This survey of executive compensation in privately held technology companies was conducted between May and August of 2013. The questionnaire resulted in 550 companies participating with data from over 3,000 executives in a wide cross section of industry sectors, geographies and stages of development.

Geography
% respondents in this range

Financing Rounds Raised

% respondents in this range

25 20 15 10 5 0 0 1 2 3
22.3 17 21 16.3 11.6 11.8

11.3 12.2 7.6 15.1 25.6 28.2

California New England Mid Atlantic Midwest West South

5 or more

The geographic distribution in 2013 closely mirrors venture capital funding trends, and the universe of private companies at large.

The companies in this years survey are at roughly the same stage as in last years survey, when measured by the number of nancing rounds raised.

Business Segment
% respondents in this range

Headcount by Number of Full-Time Employees

50 40 30 20 10 0
120
44.9
% respondents in this range

1.5 3
Software

9.2 14 8 7.5 3.9

Communications Hardware/Semi

52.9

IT Services/Consulting Digital Media/Content/Information Clean Tech Healthcare IT Other

18.8

14.4

22

2140

4175

76+

Software companies continue to make up half of the population; Clean Tech has been the fastest-growing segment over the past three years.

Respondent company headcounts were distributed similarly to those in the 2012 survey, with a slightly higher percentage of large companies this year.

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2013 Compensation & Entrepreneurship Report in Technology

Cash Compensation
This data compares 2013 compensation data with compensation data for 2012 non-founding executives. 2012 gures are represented with both actual bonus received and total unachieved target bonus for the year. 2013 bonus gures indicate at-plan target amounts. More granular analysis can be found online at www.compstudy.com.

Total Cash Compensation: Non-Founders

USD 1,000s

$400 $350 $300 $250 $200 $150 $100 $50 $0

CEO COO Head of Finance/CFO Head of Tech/CTO Head of Engineering Head of Sales Head of Marketing Head of Bus Dev/CBO Head of HR Head of Prof Svcs General Counsel
250 54 131 83 33 23 115 56 19 28 48 81 26 27 56 33 51 84 7 35 174 176 142 142 158 161 43 8 39 48 31 34 54

17
259

76

49

17 41

63

16 41

182

189 177

185

11.6
172

179

11.8
165 169

173 178

164

168

188

190

2012 Base Salary

2012 Bonus Received

2012 Unachieved Bonus

2013 Base Salary

2013 Target Bonus

Non-founder total target cash compensation was up 1.6% in 2013, down markedly from the 4.8% rate of increase between 2011 and 2012. Many positions saw lower target bonuses in 2013, highlighted by a 4.4% decrease in the target for non-founder CEOs.

On average in 2012, non-founder executives received 65.5% of their target bonuses, up from 60.3% in 2011.

Bonus as a Percentage of Base Salary

% of base salary

70% 60% 50% 40% 30% 20% 10% 0%

CEO COO
46.3 31.1 25.7 20 18.6

17

12.1 9.4 38.7

16.3
8.6 31.9 22.2 22.3

63.3

17.4 28.4

11.6
28

11 25.3 16.2

45.8

14.9 31.8 15.8 27.1

48

4.8 26

16.1

22.5

22.9 17.7

21.6

Head of Finance/CFO

Head of Tech/CTO

Head of Engineering

Head of Sales

Head of Marketing

Head of Bus Dev/CBO

Head of HR

Head of Prof Svcs

General Counsel

2012 Bonus Received

2012 Unachieved Bonus

2013 Target Bonus

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2013 Compensation & Entrepreneurship Report in Technology

Equity and Severance

The CompStudy survey also contains detailed questions around non-cash executive compensation and benets. The 2013 online reports show base, bonus, equity at hire, current equity, and severance for each executive role. More granular analysis can be found online at www.compstudy.com.

Equity Holdings
% equity owned, fully diluted

8 7 6 5 4 3 2 1 0
CEO
2 0.9 1.1 1 1 5

17
6.2

2.6

2.6 1.2 1 1.2 0.6 0.8 0.7 1.1 0.1 0.2 0.5 0.9 0.2 0.3

COO

Head of Finance/CFO

Head of Tech/CTO

Head of Engineering

Head of Sales

Head of Marketing

Head of Bus Dev/CBO

Head of HR

Head of Prof Svcs

General Counsel

2013 Median

2013 Mean

These equity gures are averages covering companies across the maturity and fundraising spectrum. As the chart below illustrates, only CEOs consistently received any severance package.

Earlier-stage non-founder executives do tend to have more equity, but dilution effects tend to level off after the second round of nancing has been raised. Nearly all severance packages are granted in three-month increments. The median length of severance for CEOs is six months. For all other positions it is three months.

Severance Eligibility
% eligible for severance

80 70 60 50 40 30 20 10 0
CEO COO Head of Finance/CFO
63.5

17

33.3

33.9 26.3 18.1 26 21 25 16.8

26.2

34.3

Head of Tech/CTO

Head of Engineering

Head of Sales

Head of Marketing

Head of Bus Dev/CBO

Head of HR

Head of Prof Svcs

General Counsel

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2013 Compensation & Entrepreneurship Report in Technology

CEO Compensation by Headcount

When controlling for other variables, headcount has proven to be the best predictor of non-founder cash compensation. Equity holdings tend to be most strongly correlated with the number of nancing rounds a company has raised.

Base Salary: By Number of Full-time Employees

$350 $300 1,000s USD $250 $200 $150 $100 $50 $0
120 FTEs 2140 FTEs 41+ FTEs

Equity: By Number of Full-time Employees

14% % Fully Diluted Shares 12% 10% 8% 6% 4% 2% 0%
120 FTEs 2140 FTEs 41+ FTEs

25th
123.8 225 245

50th
181.5 250 275

Mean
183.7 260.7 281.5

75th
226.3 289 306

25th
5 3.6 3.7

50th
6.2 5 5

Mean
10.4 5.3 5.3

75th
11.6 7.4 6.2

Slice this data yourself at www.compstudy.com

Screenshot of online reporting tool

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2013 Compensation & Entrepreneurship Report in Technology

Founder Compensation and Sponsor Information

Founder Cash Compensation
USD 1,000s

$350 $300 $250 $200 $150 $100 $50 $0

CEO Head of Finance/CFO Head of Bus Dev/CBO Head of Clinical Research Head of Regulatory Affairs Research & Develop/CSC Head of Platform Tech/CTO
240.6 34.9 87.5 57 19 19.3 24 63.4 29.6 83.8 28 34.5 19.5 36.9 9.3 257.5 182.8 191.3 206.6 205.4 164.7 164.7 260 192.8 199.5 174.6 180.8 152.3 148.7 26 35.3 51.9 26.3 30.8 6 18.5 47.8 72

64.8

17
248.4

16.3

Head of Engineering

2012 Base Salary

2012 Bonus Received

2012 Unachieved Bonus

2013 Base Salary

2013 Target Bonus

Founder Total Cash Founder CEOs received a more substantial raise than their non-founder peers: 2.5% vs 0.8%.

Founder Equity Holdings On the average, founders of technology companies hold signicantly more equity than their life science peers largely due to the less capital-intensive nature of most technology start-ups.

Sponsor Information

Park Square Executive Search is a retainer-based executive search rm located in Cambridge, Massachusetts and in Menlo Park, California. Park Square serves clients and institutions that are changing the world through discovery, innovation, and growth. www.parksquare.com

EY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and condence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities. www.ey.com

WilmerHale offers unparalleled legal representation across a comprehensive range of practice areas that are critical to the success of our clients. We practice at the very top of the legal profession and offer a cutting-edge blend of capabilities that enables us to handle deals and cases of any size and complexity. www.wilmerhale.com

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