C-Suite Executive Salaries Up and Bonuses Down at Private Technology Companies

--J. Robert Scott and Ernst & Young LLP release 11th annual Compensation and Entrepreneurship study--

Oct 14, 2010, 09:20 ET from Ernst & Young LLP from ,J. Robert Scott

BOSTON, Oct. 14 /PRNewswire/ -- According to a compensation study of private businesses released today, non-founder C-suite executives at technology companies saw their salaries increase by 3.3 percent year over year, while comparable executives at private life sciences firms experienced an average increase of 4.2 percent in base salary over 2009.  

At a near-historic low for the survey, non-founder C-suite executives at technology companies surveyed received only 56 percent of their target bonus in 2009, with non-founder CEOs specifically receiving an average of $53,000, down from $61,000 in 2008.  This represents a 15 percent decrease of total bonus attainment year over year.  Comparable executives at private life sciences firms surveyed received 67 percent of their 2009 target bonus, up from just 44 percent in 2008.

The 11th annual Compensation and Entrepreneurship study, conducted by J. Robert Scott and Ernst & Young LLP in collaboration with Professor Noam Wasserman at Harvard Business School, also revealed that the average base salary for non-founder CEOs at 560 emerging, private technology firms surveyed was $235,000, compared to $230,000 in 2009.  Among the nearly 200 emerging, private life sciences firms surveyed, non-founder CEOs attained an average base salary of $277,000, up four percent from 2009.

"While salaries did increase for executives at both technology and life sciences firms in 2010, average increases are lower year over year than we have historically found.  In fact, the average annual increase in salary over the past 10 years has been five percent," said Aaron Lapat, Managing Director, J. Robert Scott.  "Although the rate of growth for these salaries has not returned to pre-recession levels, it is substantially higher this year than last, when we saw technology executives on average receive no raise at all."

"The survey results indicate that we're in a transitional period, where a mix of economic factors makes it challenging for companies to implement effective compensation strategies.  It's important that company boards assess their current compensation structures so they strike the right balance between maintaining capital efficiency and retaining the top talent needed to seize emerging strategic opportunities," explained Bryan Pearce, Ernst & Young LLP, Americas Director, Entrepreneur of the Year® and the Venture Capital Advisory Group.

The study is the most comprehensive survey of executive compensation among privately-held, emerging technology and life sciences companies and the first to make this information readily available. The results are used as an authoritative guide by venture capital firms and their portfolio companies to make critical decisions regarding attracting, rewarding and retaining key talent.  Study results are available at www.compstudy.com and will be explained in detail during two technology- and life science-related webcasts today, October 14, starting at 11 a.m. and 1:30 p.m. EDT, respectively, led by professionals at J. Robert Scott and Ernst & Young LLP.  Webcast participants will discuss how life sciences and technology companies have reacted to the state of the economy and what the future might hold for these VC-backed companies. To access the webcast and the webcast archive, visit http://webcast.ey.com/thoughtcenter/default.aspx?prog={82edafc1-dc60-41b7-9931-e84724d09bd3}  .

Methodology

More than 750 privately-held, emerging technology and life sciences companies throughout the United States took part in the survey, which delved into the compensation, bonus and equity packages of top executive positions, including Chief Executive Officer, President/Chief Operating Officer and Chief Financial Officer. Data is analyzed in aggregate with detailed views by position looking at: industry vertical, product stage, revenue, headcount, geography, founder status and financing stage.  Nearly 85 percent of the surveyed companies have fewer than 75 employees.

J. Robert Scott

J. Robert Scott is a boutique, global retainer-based executive search firm, specializing in recruiting senior level executives for a wide array of companies in the financial services, technology, life science/health care and higher education/not-for-profit fields.  With headquarters in Boston, the firm has offices in Hong Kong, London, San Francisco, Shanghai and Singapore. Additional information about the firm can be found at www.j-robert-scott.com.

About Ernst & Young

Ernst & Young is a global leader in assurance, tax, transaction and advisory services. Worldwide, our 144,000 people are united by our shared values and an unwavering commitment to quality. We make a difference by helping our people, our clients and our wider communities achieve their potential.

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Ernst & Young refers to the global organization of member firms of Ernst & Young Global Limited, each of which is a separate legal entity.

This news release has been issued by Ernst & Young LLP, a U.S. client-serving member firm of Ernst & Young Global Limited.

SOURCE Ernst & Young LLP; J. Robert Scott



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