Ryan Roberts has a post titled ‘Series A Startup CEO Salary‘ that I thought was interesting. Ryan quotes Peter Theil who suggests, “The lower the CEO salary, the more likely it is to succeed.” Many entrepreneurs I talk to (even some I am in business with) look to raise money because they need a salary. In years past the cost of starting a business was MUCH higher than it is today and as a result CEO salaries were just a drop in the proverbial bucket. Today when you can launch a really interesting mobile/web business for less than $300,000 – the salary of the CEO or founder can mean the difference between being able to bootstrap and having to raise an angel investment round at a low valuation (this is especially true for startups in North Texas – coastal startups please ignore).
My question to Ryan (and everyone else) is ‘what is a reasonable startup CEO salary?’
The last study I saw was posted by Dharmesh Shah:
1. This year’s survey was conducted between April and June 2008.
2. 31% of the executive population this year were founders in their companies (up from 28% in the prior year).
3. CTOs and CEOs were the most frequent founders.
4. Average base salary across all positions increased by 4.7% from 2007 to 2008.
5. On average, non-founding CEOs received a 5.4% grant.
6. Outside of the CEO/President the non-founder Head of Technology holds the highest average equity percentage at 1.53%.
7. Just 33% of the companies in the latest financing stages still have the founding CEO.
8. For companies raising one or fewer rounds, the average founding CEO holds nearly one third of the equity. After two rounds, this reduces to an average of 18%.
9. Founding CTOs have 17.1% on average in companies with one or fewer financing rounds and 7.49% of companies with 2–3 financing rounds.
10. CEO average base salary went from $227,000 to $237,000.
11. Non-founder CEOs have greater total compensation ($339,000) than founding CEOs ($286,000).
12. Founding CEOs hold an average of 22.05% of the company vs. non-founding CEOs which hold just 5.46%.
13. The chairperson is the CEO of the company 56% of the time.
14. Investors comprise more than half othe board of directors seats. Outside board members comprise about 20% of the board.
