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www.compstudy.com 2008 Compensation & Entrepreneurship Report in Information Technology 2008 A
www.compstudy.com 2008 Compensation & Entrepreneurship Report in Information Technology 2008 A

2008 Compensation & Entrepreneurship Report in Information Technology

2008

A

www.compstudy.com 2008 Compensation & Entrepreneurship Report in Information Technology 2008 A
www.compstudy.com 2008 Compensation & Entrepreneurship Report in Information Technology 2008 A

A A A

A TABLE OF

1

CONTENTS

Letter to the Industry

 

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Summary of Results

 

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Founders

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Interview

Clinton W. Bybee, Co-founder and Managing Director –

ARCH Venture Partners

 

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Carlos A. Riva, President & CEO – Verenium

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2008 Compensation and Entrepreneurship Report in Information Technology

 

Chief Executive Officer

 

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President/Chief Operating Officer

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Chief Financial Officer

 

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Chief Technology Officer

 

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Head of Engineering

 

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Head of Sales

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Head of Marketing

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Head of Business Development

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Head of Human Resources

 

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Head of Professional Services

 

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Board of Directors

 

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About the Sponsors

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A A A

A LETTER TO THE INDUSTRY 3 We are pleased to present the 2008 edition of

A LETTER TO THE

INDUSTRY

3

We are pleased to present the 2008 edition of our Compensation and Entrepreneurship Report in Technology. This Report, our ninth annual version, includes summaries and analysis of compensation data collected from more than 340 private companies located throughout the country in the following six industry segments: Software; Communications; Hardware, Semiconductors and Electronics; Services, Consulting and Integration; Community, Content and Information Providers; and a new category in 2008, Clean Technology. The survey data was collected between April and June of 2008.

The Report also includes interviews with Carlos Riva, a serial entrepreneur, who describes his experience as a founder and leader of multiple organizations, and Clint Bybee, a prominent venture capitalist in the Advanced Materials sector.

Our continuing inspiration for this survey is to respond to our clients’ requests 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. Over the years we have been able to present the correlation between executive compensation and a number of variables, including financing stage, company size both in terms of revenue and headcount, founder/non-founder status, industry segment, and geography. We have also been able to provide a number of analytics on how an organization evolves with additional financing, Boards of Directors compensation and make-up, and a granular view at company equity plans.

Our survey has evolved over the years based on input received directly from the industry, and our hope is to continuously improve our data so that we can best serve the needs of our clients in the Technology industry. In that regard, we encourage readers of this publication to submit comments and suggestions to help us most efficiently and accurately present the compensation dynamics of the market. Suggestions and comments should be directed to Mike DiPierro of J. Robert Scott (mike.dipierro @ fmr.com).

Lastly, we would like to express our gratitude to Associate Professor Noam Wasserman of the Harvard Business School who, in addition to utilizing the data for his own research (more at http://founderresearch.blogspot.com), continues to contribute greatly to our publication.

CFO

CEO

4 SUMMARY

OF

RESULTS

B

Demographics of Respondent Population

• This survey of executive compensation in privately held Technology companies was conducted between April and June of 2008. The questionnaire resulted in 342 complete responses with data from over 1,600 executives in a wide cross section of industry sectors, geographies and stages of development.

• The 2008 report provides aggregated results of the data as well as a deeper examination of the population by a number of perspectives, including: financing stage, founder status, geography, headcount and company revenue.

Financing Rounds

• Companies are divided between those that have received one or fewer financing rounds, two or three rounds of financing, and those that have raised four or more rounds. As in previ- ous year’s editions the detailed breakdown by financing round shows a concentration of respondent companies at the early stages of development, though there was a slight uptick in the percentage of organizations having raised three rounds.

Founder Status

• 31% of the executive population this year were founders of their company, up slightly from 28% of the population in our 2007 edition.

• CTOs and CEOs were the most frequent founders of their companies, comprised of 58% and 56% founders respectively. In total number, the CEO is the most frequent founder.

Headcount by Number of Full Time Employees (FTEs)

• Companies with 20 or fewer FTEs again make up more approximately one-third of the population. This year’s survey included an increased number of mid-sized companies in the 41-75 FTE range, 25% of respondents, up from 20% in 2007.

78

Pre-money and 1 Institutional Round

191

137

137

www.compstudy.com KEY: 2007 2008
www.compstudy.com
KEY:
2007
2008

Financing Rounds

78

88

43

KEY: 2007 2008 Financing Rounds 78 88 43 234 55 5 or more rounds 64 49

234

55

KEY: 2007 2008 Financing Rounds 78 88 43 234 55 5 or more rounds 64 49

5 or more rounds

64

49 President/ COO
49
President/
COO

190

20

88 43 234 55 5 or more rounds 64 49 President/ COO 190 20 Founder/Non- 153

Founder/Non-

153

129 102 36 Head of Technology/CTO Head of Engineering
129
102
36
Head of
Technology/CTO
Head of
Engineering

Headcount by Number of Full-Time Employees (FTEs)

115 86 81 60 1-20 21-40 41-75 76+
115
86
81
60
1-20
21-40
41-75
76+
Head of Engineering Headcount by Number of Full-Time Employees (FTEs) 115 86 81 60 1-20 21-40
Head of Engineering Headcount by Number of Full-Time Employees (FTEs) 115 86 81 60 1-20 21-40

Head of Professional Services

Head of Sales

2008 Compensation & Entrepreneurship Report in Information Technology

Non- KEY: Founder Founder Geography
Non-
KEY:
Founder
Founder
Geography

111

64 47 49 48 16 California New Mid- Midwest West South England Atlantic
64
47
49 48
16
California
New
Mid-
Midwest
West
South
England
Atlantic

Founder Status

184

23

West South England Atlantic Founder Status 184 23 123 Founder Non-Founder 85 53 29 25 3

123

FounderWest South England Atlantic Founder Status 184 23 123 Non-Founder 85 53 29 25 3 Business

Non-FounderSouth England Atlantic Founder Status 184 23 123 Founder 85 53 29 25 3 Business Segment

85 53 29 25 3 Business Segment Head of Marketing Head Development of Business Head
85
53
29
25
3
Business Segment
Head of Marketing
Head Development
of Business
Head Resources
of Human

52

9
9

A SUMMARY OF RESULTS

5

California New England Mid-Atlantic Midwest West South
California
New England
Mid-Atlantic
Midwest
West
South

Geography

• California and New England dominate the population of com-

panies, closely mirroring venture capital funding trends and

similar to our previous editions.

Business Segment

• Software companies again were the most common segment comprising just under half of the respondents. Computer

Hardware, Semiconductor, Electronics companies were next largest with 16% of the response. A CleanTech category was added in 2008 and drew 6% of the responding population.

Company Revenue

• Survey respondents continue to lean heavily toward early stage revenue companies with 62% of participating companies generating less than $5 million, compared to 64% last year.

Company Revenue

6% 7% 12% 49% 16% 10%
6%
7%
12%
49%
16%
10%

Softwareto 64% last year. Company Revenue 6% 7% 12% 49% 16% 10% Communications Semiconductors/ Electronics Computer

Communicationsyear. Company Revenue 6% 7% 12% 49% 16% 10% Software Semiconductors/ Electronics Computer Hardware/ Content/

Semiconductors/Revenue 6% 7% 12% 49% 16% 10% Software Communications Electronics Computer Hardware/ Content/ Information Provider

Electronics

Computer Hardware/

Content/Semiconductors/ Electronics Computer Hardware/ Information Provider Systems Integration IT

Information Provider

Systems IntegrationElectronics Computer Hardware/ Content/ Information Provider IT Services/Consulting/ CleanTech 74 Pre- Revenue 140 Up to

IT Services/Consulting/

CleanTechProvider Systems Integration IT Services/Consulting/ 74 Pre- Revenue 140 Up to $5M 52 39 $5 –

74

Systems Integration IT Services/Consulting/ CleanTech 74 Pre- Revenue 140 Up to $5M 52 39 $5 –

Pre-

Revenue

Integration IT Services/Consulting/ CleanTech 74 Pre- Revenue 140 Up to $5M 52 39 $5 – 10M

140

Up to $5M

52

39 $5 – 10M $10 – 20M
39
$5 – 10M
$10 – 20M

37

Integration IT Services/Consulting/ CleanTech 74 Pre- Revenue 140 Up to $5M 52 39 $5 – 10M

$20M+

Integration IT Services/Consulting/ CleanTech 74 Pre- Revenue 140 Up to $5M 52 39 $5 – 10M

President/

COO

CEO

CFO

President/

Head of

Head of

Technology/CTO

COO

CFO

CEO

Engineering

CFO

Head of Marketing

6 SUMMARY

OF

RESULTS

B KEY:

Cash Compensation – 2007 and 2008

This data compares 2008 compensation date with

compensation data for 2007 non-founding executives.

2007 figures are represented with both actual bonus

received and total unachieved target bonus for the year.

2008 bonus figures indicate at-plan target amounts.

• Average base salary across all positions increased overall at a steady 4.7% rate from 2007 to 2008, repeating closely the rise in 2006-2007 base salary from last year’s edition, 4.6%.

29

69

226

102

236

• The Head of Human Resources and CFO saw the largest per- centage increases in base salary, 7.2% and 5.2%, respectively, year over year.

• Within prior year bonus figures, we have distinguished between actual received and target amounts. Breaking the bonus apart in this way demonstrates that on average execu- tives earned approximately two-thirds of their target incentive compensation in 2007, nearly identical to the figure from 2006.

• Overall bonus targets as a percentage of base salary did not change materially from 2007 to 2008. There was a slight decrease in target bonus for the Head of Sales, dropping from 63% of base salary in 2007 to 59% in 2008.

74%

83%

www.compstudy.com

2007 2007 2007
2007
2007
2007

Unachieved Target Bonus

Actual Bonus Received

Actual Bonus Received
Base Salary

Base Salary

58

49

183

10 28 157 165
10
28
157
165

Target BonusReceived Base Salary 58 49 183 10 28 157 165 Base Salary Total Cash Compensation 7

Base SalaryBase Salary 58 49 183 10 28 157 165 Target Bonus Total Cash Compensation 7 55

Total Cash Compensation

7

55

178

23 57 14 39 30 24 162 170 156 163 Head of Technology/CTO Head of
23
57
14
39
30
24
162
170
156
163
Head of
Technology/CTO
Head of
Engineering

70%

Executives Eligible for

84%

68%

84%

68%

84%

58%

79%

Bonus as a Percentage of Base Salary – 2007 and 2008

19%

44%

59%

13% 43% 30% CEO
13%
43%
30%
CEO
4% 31% 32% President/ COO
4%
31%
32%
President/
COO
14% 34% 18% Head of Technology/CTO
14%
34%
18%
Head of
Technology/CTO
10% 9% 29% 24% 18% 15%
10%
9%
29%
24%
18%
15%
Head of Engineering Head of Sales
Head of
Engineering
Head of Sales
9% 29% 24% 18% 15% Head of Engineering Head of Sales 11% 29% 19% 20% 40%
11% 29% 19%
11%
29%
19%
20% 40% 10% 24% 21% 14% Head Development of Business Head Resources of Human
20%
40%
10%
24%
21%
14%
Head Development
of Business
Head Resources
of Human
9% 29% 23% Head of Professional Services
9%
29%
23%
Head of Professional
Services

Head of Professional Services

Head Resources

of Business

Head of Sales

Head Development

of Human

Head of Marketing

President/

Head of

Head of

Head of Professional Services

Head Resources

Technology/CTO

CFO

COO

CEO

of Human

Engineering

2008 Compensation & Entrepreneurship Report in Information Technology

A SUMMARY OF RESULTS

7

– 2007 and 2008 30 98 18 31 70 66 48 30 33 160 167
– 2007 and 2008
30
98
18
31
70
66
48
30
33
160
167
160
166
157
165
Head of Sales
Head of Marketing
Head Development
of Business
13 45 33 11 28 15 148 156 105 113 Head Resources of Human Head
13
45
33
11
28
15
148
156
105
113
Head Resources
of Human
Head of Professional
Services

Bonus – 2007 and 2008

Company Age (Years)

73%

90%

25%

29%

23%

23%

91%

68%

70%

82%

77%

85%

73%

90%

27

29% 23% 23% 91% 68% 70% 82% 77% 85% 73% 90% 27 0-1 Where Companies Locate

0-1

Where Companies Locate Talent

13%

12%

12%

63%

20%

32%

12%

36%

20%

13%

13%

53%

22%

15%

19%

45%

27%

15%

16%

42%

24%

19%

15%

42%

22%

16%

12%

51%

143

 
 

114

 

58

143     114   58 2-6   6-10 10+ 21%   19% Other 14% 17%

2-6

 

6-10

10+

21%

 

19%

Other21%   19%

14%

17%

14%

26%

Referred by Investor14% 26%

 

Referred by Other Executive 

50%

38%

Referred by CEO50% 38%

by Other Executive 50% 38% Referred by CEO Head of Sales Head of Marketing Head Development
Head of Sales Head of Marketing Head Development of Business
Head of Sales
Head of Marketing
Head Development
of Business
by Other Executive 50% 38% Referred by CEO Head of Sales Head of Marketing Head Development

CEO

CFO

CFO

CEO

President/

CEO

COO

8 SUMMARY

OF

RESULTS

B

www.compstudy.com KEY: Median Average
www.compstudy.com
KEY:
Median
Average

Equity/Option Grants at Time of Hire

• At the average, the non-founding CEO receives a 5.40% grant to join the company, as expected, the highest of the positions surveyed.

• Incentive Stock Options continue to be the most common form of equity granted in the companies surveyed, accounting for 47% of the aggregate equity given. 58% of respondent companies rely on stock options as the sole equity vehicle. This figure is down significantly, however, from our 2007 report where 82% of companies utilized options.

Equity Holdings

• Outside the CEO and President/COO, the non-founder Head of Technology holds the next highest average equity percent- age at 1.53%.

• The combined 10 positions surveyed in this report hold on average 15.68% of the company, down from 17.13% in our 2007 edition.

Severance Packages

• 64% of non-founder CEOs have a severance package, down slightly from 67% in our previous survey. Between approxi- mately one-quarter to one-third of the remaining management team has a severance package.

• The average CEO severance package is 7.4 months. The CEO, President/COO and CFO each have a median severance of 6 months, while the rest of the non-founding positions sur- veyed have a median severance of 3 months.

Equity/Option Grants at Time

5.40

5.00

5.76

5.10

2.58

1.00 President/ COO
1.00
President/
COO

2.88

1.50 President/ COO
1.50
President/
COO
1.00 1.01
1.00 1.01
0.90 0.94
0.90 0.94
1.32 1.19 1.00 1.00 Equity Holdings Head of Technology/CTO Head of Engineering
1.32
1.19
1.00
1.00
Equity Holdings
Head of
Technology/CTO
Head of
Engineering

1.53

1.00 Head of Technology/CTO
1.00
Head of
Technology/CTO

1.41

1.00 Head of Engineering
1.00
Head of
Engineering

Severance Packages (Median

7.40

6.00

7.19

6.00

6.00

5.44 4.68 3.00 CFO Head of Technology/CTO
5.44
4.68
3.00
CFO
Head of
Technology/CTO
4.85 3.00 Head of Engineering
4.85
3.00
Head of
Engineering
7 . 4 0 6.00 7.19 6.00 6 . 0 0 5.44 4.68 3.00 CFO Head
7 . 4 0 6.00 7.19 6.00 6 . 0 0 5.44 4.68 3.00 CFO Head

Head of Professional Services

Head of Sales

Head of Marketing

Head of Professional Services

Head of Sales

Head of Marketing

Head of Professional Services

CEO

2008 Compensation & Entrepreneurship Report in Information Technology

A SUMMARY OF RESULTS

9

of Hire Median Vs. Average (%)

1.23 1.00 Head Development of Business
1.23
1.00
Head Development
of Business
1.00 1.20 0.90 0.91 0.60 0.40
1.00 1.20
0.90 0.91
0.60
0.40
0.06 0.24 Head Resources of Human
0.06 0.24
Head Resources
of Human

Median Vs. Average (%)

1.00 1.21 0.90 0.92
1.00 1.21
0.90 0.92
1.00 1.05 Head Development of Business
1.00 1.05
Head Development
of Business
0.10 0.27 Head Resources of Human
0.10 0.27
Head Resources
of Human

0.75

0.30
0.30

Equity Vehicles Used

2008 14% 7% 1% 3% 47% 13% 7% 8%
2008
14%
7%
1%
3%
47%
13%
7%
8%

Only Incentive Stock OptionsEquity Vehicles Used 2008 14% 7% 1% 3% 47% 13% 7% 8% Only Non-Qualified Stock Options

Only Non-Qualified Stock Options7% 1% 3% 47% 13% 7% 8% Only Incentive Stock Options Only Restricted Stock Only Common

Only Restricted StockIncentive Stock Options Only Non-Qualified Stock Options Only Common Stock Both Options Both Stock None Stock

Only Common StockOnly Non-Qualified Stock Options Only Restricted Stock Both Options Both Stock None Stock and Options 8%

Both OptionsStock Options Only Restricted Stock Only Common Stock Both Stock None Stock and Options 8% 4%

Both StockOptions Only Restricted Stock Only Common Stock Both Options None Stock and Options 8% 4% 4%

NoneRestricted Stock Only Common Stock Both Options Both Stock Stock and Options 8% 4% 4% 4%

Stock and OptionsStock Only Common Stock Both Options Both Stock None 8% 4% 4% 4% 4% 64% 14%

8% 4% 4% 4% 4% 64% 14%
8%
4%
4%
4%
4%
64%
14%

2007

Only Incentive Stock OptionsNone Stock and Options 8% 4% 4% 4% 4% 64% 14% 2007 Only Non-Qualified Stock Options

Only Non-Qualified Stock Options4% 4% 4% 4% 64% 14% 2007 Only Incentive Stock Options Only Restricted Stock Only Common

Only Restricted StockIncentive Stock Options Only Non-Qualified Stock Options Only Common Stock Both Options None Stock and Options

Only Common StockOnly Non-Qualified Stock Options Only Restricted Stock Both Options None Stock and Options and Average in

Both OptionsStock Options Only Restricted Stock Only Common Stock None Stock and Options and Average in #

NoneOptions Only Restricted Stock Only Common Stock Both Options Stock and Options and Average in #

Stock and OptionsOnly Restricted Stock Only Common Stock Both Options None and Average in # of months) 4.82

and Average in # of months)

4.82

4.33 3.92 3.00 3.00 3.00 Head of Sales Head of Marketing Head Development of Business
4.33
3.92
3.00
3.00
3.00
Head of Sales
Head of Marketing
Head Development
of Business
3.90 3.00 Head Resources of Human
3.90
3.00
Head Resources
of Human

Executives with Severance Package

3.00 2.89

of Human Executives with Severance Package 3.00 2.89 64% 41% 34% 33% 30% 27% 26% 25%

64%

41% 34% 33% 30% 27% 26% 25% 19% 17% President/ COO CFO Head of Technology/CTO
41%
34%
33%
30%
27%
26%
25%
19%
17%
President/
COO
CFO
Head of
Technology/CTO
Head of
Engineering
Head of Sales
Head of Marketing
Head Development
of Business
Head Resources
of Human
Head of Professional
Services
Head of Sales Head of Marketing Head Development of Business Head Resources of Human Head of
Head of Sales Head of Marketing Head Development of Business Head Resources of Human Head of

CFO

CEO

CEO

10

FOUNDERS

B KEY:

www.compstudy.com

2007
2007

Target Bonus Not Received

2007
2007

Actual Bonus Received

2007
2007

Base Salary

Target Bonus2007 Actual Bonus Received 2007 Base Salary Base Salary Organizational Structure by Financing Round •

Base SalaryActual Bonus Received 2007 Base Salary Target Bonus Organizational Structure by Financing Round • 96% of

Organizational Structure by Financing Round

• 96% of companies surveyed from the earliest stage of financ- ing reported a CEO, with 79% of those CEOs being founders of their companies. This is a slight increase from last year’s edition where 92% of companies in the earliest stage of financing were led by a CEO and two-thirds were founders.

• For just 33% of those companies in the latest financing stages, the founding CEO remains in control.

• The CFO is the most frequent addition as a company moves from one or fewer rounds raised to two to three rounds. Just 30% of companies at the earliest stage have a CFO, jumping to 66% at companies with 2-3 rounds raised.

Equity by Financing Round

• In companies having raised one or fewer rounds the average founding CEO holds nearly one-third of the company’s fully- diluted equity. After 2 rounds of financing, this reduces to an average of approximately 18%.

• Founding CTOs see a dramatic effect on equity holding as financing rounds increase, decreasing from 17.1% in compa- nies with one or fewer rounds raised to 7.49% in those with 2-3 rounds of financing.

Organizational Structure by Financing

17% 37% 63% 27% 26% 38% 74% 79% 45% 58% 15% 55% 58% 29% 42%
17%
37%
63%
27%
26%
38%
74%
79%
45%
58%
15%
55%
58%
29%
42%
32%
14%
26%
38%
33%
31%
26%
16%
11%
10%
8%
4%
4%
6%
5%
CEO
President/
CFO
Head of
Head of
COO
Technology/
Engineering
1
4
or fewer
2-3
or more
1
4
or fewer
2-3
or more
1
4
or fewer
2-3
or more
1
4
or fewer
2-3
or more
1
4
or fewer
2-3
or more

22.05

17.00

36

95

190

88

197

15.43 9.00 President/ COO
15.43
9.00
President/
COO

3.24

2.00
2.00
27 86 108 24 42 38 180 191 154 159 President/ COO CFO
27
86
108
24
42
38
180
191
154
159
President/
COO
CFO

CTO

Equity Holdings

8.91

6.00 6.22 4.60 Cash Compensa Head of Technology/CTO Head of Engineering
6.00
6.22
4.60
Cash Compensa
Head of
Technology/CTO
Head of
Engineering
20 31 52 56 49 50 165 156 154 161 Head of Technology/CTO Head of
20
31
52
56
49
50
165
156
154
161
Head of
Technology/CTO
Head of
Engineering
Head of Engineering 20 31 52 56 49 50 165 156 154 161 Head of Technology/CTO
Head of Engineering 20 31 52 56 49 50 165 156 154 161 Head of Technology/CTO

Head of Professional Services

of Business

Head of Sales

Head Resources

Head Development

of Human

Head of Marketing

Head of Professional Services

2008 Compensation & Entrepreneurship Report in Information Technology

25th

Median

75th

percentile

percentile

KEY:

25th Median 75th percentile percentile KEY: Mean Round (Founder and Non-Founder) Non- KEY: Founder

Mean

Round (Founder and Non-Founder)

Non- KEY: Founder Founder 78% 49% 35% 49% 38% 35% 23% 15% 15% 8% 15%
Non-
KEY:
Founder
Founder
78%
49%
35%
49%
38%
35%
23%
15%
15%
8%
15%
10%
17%
16%
21%
14%
9%
8%
2%
10%
3%
4%
5%
4%
7%
1%
1%
1%
4%
1%
1
4
or fewer
2-3
or more
1
4
or fewer
2-3
or more
1
4
or fewer
2-3
or more
1
4
or fewer
2-3
or more
1
4
or fewer
2-3
or more

Head of

Head of

Head of

Head of

Sales

Marketing

Business

Human

 

Development

Resources

– Founders

 
 

KEY:

Median
Median
Average
Average
 

7.45

7.19

3.00

3.00 2.50 6.31 4.00   6.20
2.50
2.50

6.31

4.00
4.00
 

6.20

6.20
  0.30
 

0.30

Head of

Professional

Services

7.23

2.20
2.20

A FOUNDERS

Founder CEO – Equity by Financing Round

1

2-3

4+

18.60

30.00

40.00

Equity by Financing Round ≤ 1 2-3 4+ 18.60 30.00 40.00 31.51 7.10 13.03 22.00 18.13
Equity by Financing Round ≤ 1 2-3 4+ 18.60 30.00 40.00 31.51 7.10 13.03 22.00 18.13

31.51

7.10 13.03 22.00 18.13 5.40 10.00 16.00
7.10
13.03
22.00
18.13
5.40 10.00
16.00

15.63

Founder President/COO – Equity by Financing Round

1

9.00

18.00

33.00

– Equity by Financing Round ≤ 1 9.00 18.00 33.00 24.18   2.50 6.00   22.00
– Equity by Financing Round ≤ 1 9.00 18.00 33.00 24.18   2.50 6.00   22.00
– Equity by Financing Round ≤ 1 9.00 18.00 33.00 24.18   2.50 6.00   22.00

24.18

 

2.50

6.00

 

22.00

2-3

       
 

11.21

 

3.00

4.55

8.00

4+

4+  
 

5.94

tion – Founders

47 11 83 77 12 50 43 54 43 166 170 159 166 150 155
47
11
83
77
12
50
43
54
43
166
170
159
166
150
155
Head of Sales
Head of Marketing
Head Development
of Business
10 107 112 Head Resources of Human
10
107
112
Head Resources
of Human

Founder Head of Technology/CTO – Equity by Financing Round

43

64

148

60

160

1

2-3

4+

by Financing Round 43 64 148 60 160 ≤ 1 2-3 4+ 8.25 15.00 22.32 17.10

8.25

15.00

22.32

Round 43 64 148 60 160 ≤ 1 2-3 4+ 8.25 15.00 22.32 17.10 2.00 5.00
Round 43 64 148 60 160 ≤ 1 2-3 4+ 8.25 15.00 22.32 17.10 2.00 5.00
Round 43 64 148 60 160 ≤ 1 2-3 4+ 8.25 15.00 22.32 17.10 2.00 5.00

17.10

2.00 5.00 10.00
2.00
5.00
10.00

7.49

2.00 3.00 6.00
2.00 3.00
6.00

4.00

Round 43 64 148 60 160 ≤ 1 2-3 4+ 8.25 15.00 22.32 17.10 2.00 5.00

11

12

INTERVIEWS

B

CLINTON W. BYBEE Co-founder and Managing Director ARCH VENTURE PARTNERS

Clinton Bybee is a co-founder and Managing Director of ARCH Venture Partners. Mr. Bybee concentrates primarily on advanced materials, electronics, semiconductors, photonics, and infrastruc- ture businesses.

Mr. Bybee has helped organize and finance numerous companies including MicroOptical Devices (acquired by EMCORE), Cambrios Technologies, Aveso, Innovalight, Intelligent Reasoning Systems (acquired by Photon Dynamics), Semprius, Nanosys, and Xtera Communications.

He is a board member of Impinj, Innovalight, Cambrios Technologies, Xtera Communications, Nitronex and Aveso. Mr. Bybee is an organizing member of the Texas Venture Capital Association and currently serves as its first President.

Previously, Mr. Bybee worked with ARCH Development Corporation. He also managed a venture investment fund for the State of Illinois and was a production engineer with Amoco Corporation. Mr. Bybee holds an M.B.A. from the University of Chicago and a B.S. in Engineering from Texas A&M University.

www.compstudy.com

Aaron: How about starting with you walking me through your life before venture capital. What was your career before you got into the venture industry?

Clint: I was an engineer. I studied engineering at Texas A&M and went to work as a production engineer with Amoco, which is now part of BP. I worked in the Permian Basin. Those were tough times in the oil business — rapidly declining oil prices, lay-offs, tough economic times. The good news for me was that with all the lay-offs, I suddenly found myself with a huge amount of responsibility. Even when you cut half of the engi- neers, you still have lots of operating challenges, and I received an exponential increase in responsibility. I left Amoco about three and a half years later. The lay-offs were regular and I had an opportunity to take a voluntary severance package that I planned so I could head off for business school while still get- ting paid.

Aaron: Not a bad deal.

Clint: Not at all! I went to the University of Chicago and when I arrived, there was a new group that had been formed about a year earlier called ARCH Development Corporation. It was formed by the Trustees of the University with a mission to com- mercialize technologies emanating from the University of Chicago and the Argonne National Laboratory, which the University operates for the Department of Energy.

Aaron: How was that different from a technology transfer office?

Clint: It was set up differently. It was set up as a private compa- ny. ARCH Development Corp. was a not-for-profit, 501(c)3 company whose sole member was the University of Chicago. The trustees set it up that way because they wanted to be able to put the proper incentives in place and knew under a tradi- tional academic structure it would be difficult to hire a real business person who could have some skin in the game. That was the innovative piece of ARCH Development Corp. It was set up with a high level mission to commercialize technology and included an incentive to start companies as the preferred means of commercialization.

to commercialize technology and included an incentive to start companies as the preferred means of commercialization.
to commercialize technology and included an incentive to start companies as the preferred means of commercialization.

2008 Compensation & Entrepreneurship Report in Information Technology

13

CLINTON BYBEE, CO-FOUNDER AND MANAGING DIRECTOR, ARCH VENTURE PARTNERS

Aaron: Who did the University recruit to build the business?

Clint: They brought in Steve Lazarus who had been a senior executive at Baxter Laboratories. He was one of the key people involved in the American Hospital Supply-Baxter combination. Following the merger, Steve chose to retire from Baxter, and was recruited to be the initial CEO of ARCH Development Corp.

Aaron: How did you get involved with ARCH Developmemt Corp. as a student?

Clint: One of the things Steve wanted to do was to teach. So he convinced the University to put ARCH Development Corp. in the business school and the University gave Steve an appointment as an Associate Dean of the Graduate School of Business. When I got on the ground there in 1988 to attend business school, Bob Nelsen and Keith Crandell, who are now my part- ners, were working at ARCH Development Corp. as volunteers. I joined them as a volunteer, seeing this as a great way to take my interest in science and technology and apply it to business. I got started by spending around 20 hours a week at Argonne National Lab, which is about 45 minutes from the University.

Aaron: So the idea was to find technology that could be spun out of Argonne into businesses?

Clint: Exactly.

Aaron: Where did the funding come from?

Clint: Well, that led to the next problem. ARCH Development Corp. was not set up to be a venture capital firm; we were set up to start companies. So in many cases we were running the companies ourselves until we could get enough momentum where we could recruit professional managers. By the late ‘80s we had some companies going that needed real funding. There were some good venture funds in Chicago at the time, but when we would show up to talk to them about our companies, the idea of backing a raw startup with an incomplete or non-exis- tent management team and technology that was not fully developed yet into a product was essentially a foreign notion to those guys.

Aaron: So it was hard to find funding?

Clint: Impossible. There was interest from some West Coast firms but Chicago was a long way away, it’s cold in the winter, and that didn’t appeal to them. We concluded that if we were going to turn the corner on this experiment, we had to have some seed investment capability, so we set out to raise a fund. It took over a year to raise the first fund, which was $9 million dollars, in 1989. It’s undoubtedly the hardest money that ARCH ever raised.

Aaron: Was this still under the auspices of ARCH Development Corp.?

Clint: Yes. ARCH Development Corp., a 501(c)3 not-for-profit, was the general partner of ARCH Fund I. It was an odd struc- ture. Steve Lazarus really raised the first fund - he brought immense credibility from his executive roles at Baxter and as Deputy Assistant Secretary of Commerce prior to that. We did 12 companies with that first fund.

Aaron: Wow. Twelve companies off of $9 million dollars?

Clint: We learned to syndicate. We made mistakes and learned some important lessons about funding to milestones. We ulti- mately wrote four of those first companies off, took four public, and four were acquired.

Aaron: What was your industry focus?

Clint: It was essentially the mirror image of the focus at the University of Chicago and Argonne National Laboratory, which is life sciences, physical sciences, and information sciences, and areas where those disciplines converge.

Aaron: When did you make the break from the 501(c)3?

Clint: That was after fund one, which was in the 1992 time frame. We had fully invested in fund one by 1992 and by this time we found ourselves in the venture capital business. We saw enough opportunity to organize a second fund, and as we set out to raise a new fund the Trustees of the University encouraged us to spin out. So we formed ARCH Venture Partners with the University’s blessing as a separate, private group, and we began to spread out geographically. It began with the Vice Provost of Columbia University inviting us to put an office there. He had followed our work at Chicago. This sparked the idea to pursue a national strategy.

us to put an office there. He had followed our work at Chicago. This sparked the
us to put an office there. He had followed our work at Chicago. This sparked the

14

INTERVIEWS

B

AARON D. LAPAT Managing Director J. ROBERT SCOTT

Aaron has been with J. Robert Scott since 1993 and built the firm’s high tech practice. He leads senior level search assignments across

a range of industry segments, including Software, Communications,

Semiconductors/ Microelectronics, Specialty Materials and CleanTech. His practice emphasizes recruiting CEOs and functional leaders for growth-oriented and venture-backed companies.

Additionally, Aaron oversees the creation of the annual Compensation and Entrepreneurship Report in Information Technology at www.compstudy.com.

Prior to joining J. Robert Scott, Aaron spent four years with a retainer-based executive search firm that serviced the high tech- nology industry.

Aaron holds a B.A. in Anthropology as well as an M.B.A. from

Boston University. He serves on the Board of Advisors of Stax, Inc.,

a privately-held consulting and market research firm. Aaron and

his wife Lauren have two children, Sophie and Sammy. In his spare time, Aaron plays tennis, runs and listens to music. On the off days, he can be found stoking the embers of his VW-sized Texas BBQ, mixing up a homemade hot sauce, or trying to create the perfect play-list from his ever-expanding record (mp3) collection.

www.compstudy.com

Aaron: How did you execute this? Did you send a partner to New York?

Clint: We had someone who joined us for a while in New York, but we learned a lesson that other venture funds have learned. It’s hard to weld somebody on in a remote geography. It did not ultimately work out effectively. Instead we tried the other approach, which was to move people from the core out to remote geographies. Bob Nelsen moved to Seattle; he is from that part of the country and was interested in being out west. We saw an opportunity to have a presence near the University of Washington and that has been very productive for us. Since I was the only guy in the group who had been to the southwest- ern part of the United States, I went to Albuquerque in 1994.

Aaron: Talk about finding a place off the beaten trail to do venture investing.

Clint: I was the only venture capitalist in the whole state. Actually, I think I was the only venture capitalist most people had ever heard of. Within a year after I got on the ground we helped start a company out of Sandia National Laboratories called MicroOptical Devices. I spent almost a year working nearly full time with the two scientific founders to get it started. It turned out to be a nice success as it was acquired by a public company called Emcore. The acquisition was the catalyst for Emcore’s transition out of equipment and into devices and com- ponents. It is now the center of gravity of Emcore.

Aaron: When did you come to Texas?

Clint: I came here in 2000. We continued to get bigger. Our sec- ond fund was $31 million, our next fund was $107 million and the one after that was $180 million. As we scaled, it became less viable for Partners like me to spend nine months working on one company full time. At that time, Albuquerque was a dif- ficult place to scale an operation. I knew Austin well and had a couple of companies here. So we concluded it was either Austin or California, and our collective judgment was that California was ripe with a lot of smart venture capitalists, so we came to Austin instead.

collective judgment was that California was ripe with a lot of smart venture capitalists, so we
collective judgment was that California was ripe with a lot of smart venture capitalists, so we

2008 Compensation & Entrepreneurship Report in Information Technology

15

CLINTON BYBEE, CO-FOUNDER AND MANAGING DIRECTOR, ARCH VENTURE PARTNERS

Aaron: What is it in the culture of the firm and your investment philosophy that has kept the partnership an enduring one?

Clint: That’s a great question because as you know, we now operate with offices in Chicago, Austin, Seattle, and San Francisco, which presents challenges. I think it works well for a couple of reasons. The first is that Bob, Keith, Steve, and I have worked together from the beginning and we have seen the good, the bad, and the ugly together, which helps to build a pretty close bond.

Aaron: How many partners are there now?

Clint: Five. There are the original three, as Steve is now an emeritus partner, plus two others. Steve Gillis joined us about three years ago as a Venture Partner and he is now a Partner focused on biotechnology companies; and then Scott Minnick, who is also a biotech guy based in San Francisco. Both Steve and Scott have a significant amount of operating experience and entrepreneurial success. The venture partner model has been very good for us because it has allowed both sides to try before we buy.

Aaron: Is it difficult for operating executives to make the transition to venture?

Clint: It can be. I think the really early stage stuff is probably an easier transition on operating guys because the companies generally need them to be involved in more things. At some point, however, people need to make the decision as to whether they want to be driving the car or sitting in the backseat. That is the decision you have to make in going from the operating world to venture.

Aaron: How has the investment focus of the firm evolved over time?

Clint: We remain focused on three sectors, Life Sciences, Physical Sciences, and IT. IT for us tends to cut across opportu- nities in life sciences and physical sciences. Most of our physical science companies involve materials innovations that lead to semiconductor innovations or innovations in opto-elec- tronics, photonics, energy, and communications. While the term cleantech makes us a bit uncomfortable because of the buzz and hype surrounding it, we have been involved in solar and other renewable technologies for some time.

Aaron: So, you have invested in the renewable technologies sector as an offshoot of your focus in advanced materials?

Clint: Right. For example, we co-founded a company called Innovalight in 2003 around fundamental innovations in silicon nanoparticles developed at the University of Texas. The compa- ny is now based in Sunnyvale and is a very promising thin film solar company using its silicon nanoparticles in an ink as a key ingredient. Another example is a company called Nanophase Technologies, which my partner Keith Crandell founded back in 1990, long before nanotech was cool. Nanophase Technologies was formed to exploit the commercial applications of nanoma- terials developed at Argonne National Lab. Cleantech gets lumped into our physical sciences activity because the innova- tions tend to be physical sciences related (materials, chemicals, electrochemical, etc.). We also find that where phys- ical sciences and life sciences converge is a fertile territory for new companies. Sapphire Energy is a portfolio company that is making gasoline from algae, and represents a convergence of physical science and biological sciences.

Aaron: Let’s move the discussion toward executive leadership in your portfolio companies. What makes a great CEO for an emerging business?

Clint: I don’t know that there is one answer. Two very good models that work are (1) “done it before” or (2) you “know the industry cold.”

Aaron: If forced to choose between entrepreneurial athleticism and deep domain expertise, which do you take?

Clint: I have seen examples of both, and “done it before” entre- preneurial athleticism is probably going to outcompete deep domain expertise nearly every time. For example, we recruited a CEO to a company here in Austin, which he built and sold to a public company and then we recruited him into a telecom com- pany, yet he had no telecom experience at all. He has done a great job because he’s a hard charging entrepreneurial operat- ing guy and was able to compliment himself on the telecom side with team members from the industry. The best CEOs are the ones that know what they’re good at and what they’re not and work hard to get A+ people around them to fill in the gaps.

that know what they’re good at and what they’re not and work hard to get A+
that know what they’re good at and what they’re not and work hard to get A+

16

INTERVIEWS

B

www.compstudy.com

16 INTERVIEWS B www.compstudy.com Aaron: How do you manage the transition from one CEO to a

Aaron: How do you manage the transition from one CEO to a new leader?

Clint: These can be very uncomfortable conversations to have if you don’t have a CEO that’s mature, and self-aware as to his or her own abilities. It is not uncommon for us to put incentives in place that reward the CEO for finding his replacement.

Aaron: I suppose standard vesting schedules on options can be something of a disincentive for a CEO to move on.

Clint: Yes. This is an area where I’ve been spending a fair amount of time over the last year. By and large, most incentive plans are inadequate. Time vested options are a pretty blunt tool that do not correlate all that well to the performance that drives shareholder value. The incentive is the longer you stick around, the more you vest.

Aaron: Instead, have you been tying vesting to performance objectives?

Clint: Yes. The accounting profession did us a bit of a favor in that regard in that they now for all practical purposes make you account for all options using variable accounting treatment, so there is no longer a disincentive to using milestone vesting as opposed to time based vesting or in addition to time vesting. I’m on the board and compensation committee of three compa- nies where we have recently put together equity incentive plans that are heavily weighted to milestone vesting and the mile- stones have a very clear correlation to shareholder value, like revenue, gross margin, profitability, and market share. It is hard to do this in an early stage company, but it gets easier as a business matures and begins to ramp sales.

Aaron: Because in the early stages, objectives are fluid?

Clint: They are very fluid. Sometimes technical milestones take longer, often times sales milestones take longer.

Aaron: So does that mean milestone based vesting just doesn’t work at the early stages?

Clint: I don’t know. That’s a good question. They are a lot hard- er. In the earliest stages of a company I would probably lean toward a blunt instrument. As the company matures, it is perti- nent to begin to apply sharper and sharper instruments by tying vesting to hitting milestones that are directly correlated with building shareholder value. I have seen one ancillary ben-

vesting to hitting milestones that are directly correlated with building shareholder value. I have seen one

2008 Compensation & Entrepreneurship Report in Information Technology

17

CLINTON BYBEE, CO-FOUNDER AND MANAGING DIRECTOR, ARCH VENTURE PARTNERS

efit in that it provides CEOs a tool around which to drive and motivate everybody in the organization. For example, one of our CEOs wanted every single employee tied to this plan and he posted the milestones on the wall so everybody knew the focus. As companies mature, you need to instill more discipline and focus. You almost have to create a religion around your mission and milestones. The creative people that got the company from start-up to a point of greater maturity sometimes have a hard time with this and the milestone based vesting sure helps to transition to a culture of execution.

Aaron: What do you look for when you’re building Boards for your companies?

Clint: We spend an increasing amount of time trying to build Boards with highly experienced operating executives. Some of the most valuable insights for our companies come from the operating people on the Board. At one of our companies, Cambrios Technologies, we recruited Dan Maydan to the Board. Dan was the former President of Applied Materials. Then we recruited Gene Benucci to the Board. Gene was the Founder and currently Chairman of ATMI, a leading semiconductor materials company. This company is doing electronic materials for touch screens and displays and having two deeply experi- enced operating people from that sector has made a huge impact.

Aaron: Do you use the role of Executive Chairman?

Clint: We do, but mostly in troubled companies or as an interim step. We have a guy that’s worked with us in a couple of compa- nies as Executive Chairman and he’s a delight to work with because he can come in to a company and quickly assess what needs to get done. He’s then very good at assuming an interim operating role and can drive a team hard to transition to the direction that they need to go. He then is good at recruiting a full-time CEO as his replacement.

Aaron: Venture Capital used to be a local business. That’s not your model. You guys have proven an ability to do it on a national scale. Do you now see the industry globalizing?

Clint: Sure. We try to follow the great scientific innovations and their innovators, and unfortunately they don’t all exist in the United States. There are some great academic research univer- sities in Europe. There are an increasing number of good scientific innovators in China. There, the pattern involves

Chinese nationals getting educated in the best schools in the West, doing post docs over here and in Europe, working at places like Bell Labs and other great research institutions in the West and then returning to China to run research labs with better funding than they would be able to get in the U.S.

This is a major change. There remain plenty of great things to work on by focusing on what we do here in America. I think over time, however, that is going to change and we are begin- ning to put relationships in place to begin taking advantage of innovations that happen not just here, but internationally as well. If you kick it up a level and think about the venture indus- try in general, back in the early days of the business you could think about building a business largely in the U.S. market. Only after getting to a significant size or reduction in risk could one imagine building an international operation. This old model has changed where now you really have to do things on a global basis very very early. Now there are often market opportunities that are uniquely Chinese, or uniquely Indian. So I see the busi- ness becoming increasingly more global. I think it has to.

are uniquely Chinese, or uniquely Indian. So I see the busi- ness becoming increasingly more global.
are uniquely Chinese, or uniquely Indian. So I see the busi- ness becoming increasingly more global.

18

INTERVIEWS

B

www.compstudy.com

CARLOS A. RIVA President and Chief Executive Officer VERENIUM

Carlos Riva became President, Chief Executive Officer and Director of Verenium in June 2007, after the merger of Diversa Corporation and Celunol Corporation closed. Mr. Riva joined Celunol, a private- ly held developer of cellulosic ethanol process technology, as Chairman and Chief Executive Officer in 2006.

Prior to joining Celunol, from 2003 to 2005, Mr. Riva served as Executive Director of Amec plc, a major global construction and engineering company based in the United Kingdom, where he was responsible for the company’s operations in the United States and Britain and for Amec’s global oil and gas business strategy. From 1995 to 2003, Mr. Riva served as Chief Executive Officer of InterGen, a Boston-based joint venture between Shell and Bechtel that developed more than 18,000 megawatts of electric generating capacity, along with gas storage and pipelines, on six continents. Under his leadership, InterGen raised $9 billion of non-recourse project financing to construct power projects and grew from a development company concept to a successful, global operating business. From 1992 to 1994 Mr. Riva was President and Chief Operating Officer of Boston-based J. Makowski Company, which developed the first independent power project in the United States.

Mr. Riva earned a S.B. and M.S. degrees in Civil Engineering from the M.I.T. and Stanford University respectively, and an M.B.A. from the Harvard Business School.

Aaron: Why don’t we begin with your career history?

Carlos: I began my career as a civil engineer. I went to MIT as an undergrad and to Stanford for a graduate degree in engi- neering. My first job after school was with an architect engineering firm called Gilbert/Commonwealth. They were once one of the top architect engineers in the country specializ- ing in building nuclear power plants.

Aaron: What did you do for the construction firm?

Carlos: I was working on design of power projects and other civil engineering projects. The company wasn’t solely in the nuclear business, but that was one of their major areas. During my second year there, the accident at Three Mile Island happened. The firm was located in Pennsylvania, about 100 miles from Three Mile Island, and I remember everyone at the firm being excited because they thought the incident would lead to a lot of work. I remember telling one of my colleagues that he was out of his mind. I viewed that incident as the twilight of the nuclear industry for a long while, so I decided to go back to school to get an MBA and went to Harvard. When I graduated from business school, the last thing I wanted to do was to go back into the electric power business. I have always loved energy and wanted international experience, so I joined a company called Oceaneering International, a publicly listed company in the oil field services sector. They were the lead- ing technology provider for underwater services to the offshore oil and gas industry. I was in with Oceaneering in the UK and did work all around the North Sea, West Africa, the Middle East, and Asia. I was later offered the job of running their West Coast US opera- tions. This was principally focused on the offshore California and Alaska markets, and my wife and I decided to move to Anchorage. This was 1985 and oil prices started to fall precipitously, prompt- ing the oil companies to curtail their frontier exploration, and thus evaporating our market.

Aaron: The market collapsed while you and your wife were in the wilderness of Alaska?

Carlos: We were not exactly in the wilderness of Alaska, but we loved it. We contemplated staying but concluded it was too far away so we came back to Boston, which was our home. I joined up with a local entrepreneur by the name of Jacek Makowski, who is one of the real legends of the energy industry. He had been the developer of the LNG terminal in Everett, MA built by Cabot Corp. and had been the genius behind a number of other highly innovative projects in the energy industry.

built by Cabot Corp. and had been the genius behind a number of other highly innovative
built by Cabot Corp. and had been the genius behind a number of other highly innovative

2008 Compensation & Entrepreneurship Report in Information Technology

19

CARLOS A. RIVA, PRESIDENT & CEO, VERENIUM

Aaron: What did you do with Makowski?

Carlos: Jacek had put together an electric power project using Canadian natural gas, which had never been imported in such large quantities here before for electric power generation. He established a partnership with a number of local utilities and a Canadian gas pipeline company. He was looking for a project manager and brought me in to run the project. It was a signifi- cant deal. We developed a 500 megawatt project on the Massachusetts / Rhode Island border which turned out to be the first IPP built in the US. On the basis of that project, we built up a company and developed a number of other large gen- eration projects in the Northeast.

Aaron: What ultimately became of that business?

Carlos: I had become President of the business and nine years after joining, we sold the business to Bechtel and Pacific Gas and Electric. The new owners then asked me to start a parallel business focused on developing power projects overseas, so I put together a group in 1995. The new company was called InterGen. We had some significant early successes. We devel- oped and closed the financing on a 700 megawatt project in Great Britain, a 700 megawatt project in Mexico (which was the first IPP in Mexico) and then a 480 megawatt coal fired project in the Philippines, all within the first 18 months. Those projects gave us the anchor to set up development companies for those three regions: Europe, Asia, and Latin America, and we contin- ued on at a pretty aggressive pace. Over eight years, from 1995-2003, we developed on the order of 15,000 megawatts of new projects in a dozen countries. We were planning for an IPO in 2001; then 9/11 and the Enron meltdown happened, combined with the unraveling of power markets, here in the US, all mak- ing an IPO impossible for a company like ours. So I was asked by the owners to change the nature of the company from being a developer to becoming an operator. We dismantled the develop- ment apparatus and turned the business into a global utility. I decided that running an operating utility business wasn’t where my interests lay and was lured away by a large British engineer- ing contractor called Amec to run a large portion of their business with a view towards growing the company significantly.

Aaron: How did you get connected to Celunol/Verenium?

Carlos: I spent three terrific years in the UK, but much of the business Amec hired me to run was not a growth priority and at

that point, I was looking to get back to the US and back into ener- gy with a development focus. I have always been interested in renewables, particularly cellulosic ethanol, and I became aware of Celunol, which was the predecessor of Verenium, and which had recently been recapitalized by a group of venture backers.

Aaron: What was it that compelled you to Celunol?

Carlos: What appealed to me most was that this company had a distinct technological advantage. The company was one of the front runners of the industry from a technology development perspective, but had decided to become more than just a tech- nology provider. We wanted to become further integrated and become developers, owners, and operators of production facili- ties using our technology to leverage us into that position.

Aaron: This plays to your development experience, but you have never run a technology company.

Carlos: The Company wasn’t looking for a CEO who was a great scientist, organic chemist, or microbiologist. They were looking for someone that could take the business and the science, commercialize it, and develop it into projects.

Aaron: How old was the business at this point?

Carlos: The business had been started in the early ‘90s and had gone through a number of evolutionary steps. They tried a cou- ple of times to build commercial scale units, but when oil prices went back down into the teens there just wasn’t a viable business model. Throughout that time, though, they were mov- ing the ball forward with their science and technology.

Aaron: What was the state of the business when you joined?

Carlos: The science was well ahead of most of the other com- petitors in the sector. It still needed a lot of work and still does, but it was at a stage that I thought was distinctive and could be driven forward. We had microorganisms that had been geneti- cally modified to ferment the different component sugars of biomass into ethanol. We also had a pilot plant in Louisiana that was partially operational. So, we needed to finish building out the pilot plant and continue the scaling and technology development efforts.

So, we needed to finish building out the pilot plant and continue the scaling and technology
So, we needed to finish building out the pilot plant and continue the scaling and technology

20

INTERVIEWS

B

www.compstudy.com

Aaron: How was the business funded?

Carlos: There was venture capital funding that came in about a year before I joined from Charles River Ventures, Braemar, Rho Capital, and Khosla Ventures. I think finding a CEO was a chal- lenging process for them because this is such a new industry so it is difficult to pluck someone out of a company with deep exposure to this space. You have to take a bit of a leap of faith on adjacent skills.

Aaron: You know the energy industry and are a deal guy.

Carlos: That’s right. I wasn’t a science guy, but I had a techni- cal education, so I am not uncomfortable with science and technology. I also had experience building companies. Soon after joining, I knew we would need to get more funding. My CFO is a brilliant finance and deal guy; not from energy, but from life sciences and biotech. He and I were exploring various options and began looking at Diversa. They were a public com- pany based in California that had a lot of interest in biofuels and were specialists in enzyme technology, which is another one of the components that is essential to our production process. They had great technology, but felt it was not being fully valued and decided to integrate vertically. Both companies were aware of each other’s strengths and technology, and as our discussions progressed, it became clear that a merger would accelerate each of our respective efforts to commercially produce cellulosic ethanol. Technically, Diversa issued shares and acquired 100% of what was then Celunol, but the Celunol management team was effectively invited to manage the com- bined company.

Aaron: What time frame was this?

Carlos: This was about a year ago. The combination of the com- panies was important as it provided funding to advance our cellulosic ethanol technology development. It also made us a public company. Shortly after we announced the merger we raised an additional $120 million through a convertible debt offering. We also did a subsequent convertible debt round which raised a further $50 million early this year.

debt offering. We also did a subsequent convertible debt round which raised a further $50 million
debt offering. We also did a subsequent convertible debt round which raised a further $50 million

2008 Compensation & Entrepreneurship Report in Information Technology

21

CARLOS A. RIVA, PRESIDENT & CEO, VERENIUM

Aaron: How has the integration with Diversa gone?

Carlos: Extremely well. We had about four months between announcing the deal and getting SEC approval to work out a very detailed plan for integration. It was a little strange because Celunol management wasn’t part of Diversa during that four month period, so we had no real management responsibility, but everyone was very cooperative and we were able to inte- grate the businesses very smoothly upon closing. The R&D operations of the two organizations were merged and moved to San Diego, which is where Diversa was headquartered. Cambridge was where we had our project development and engineering groups, and we decided to locate our corporate offices here as well. Our production facilities in Louisiana rounded out the organization. All in all, the merger has been a success in providing a very strong enzyme business as well as the strong scientific talent base that we were looking for to support the growth of our biofuels technology.

Aaron: Does owning the enzyme business give you a meaningful competitive advantage?

Carlos: It does, because enzymes are one of the important ingredients in cellulosic ethanol production. It is also a com- pelling commercial business on its own that has been growing rapidly. It is still small, but we had $26 million in product sales last year. The year before it was $16 million, and this year we have given guidance that we’ll be just shy of $40 million, so it’s a pretty rapid ramp up. This was quite a change because tradi- tionally most of Diversa’s revenues came from contract research, yet there was very little opportunity to get operating leverage from contract research. So what they really wanted to do was become more of a product driven company. We were able to facilitate that transition, and it is going quite well.

Aaron: How has being public changed the business?

Carlos: For starters, the company has changed by virtue of growing very rapidly. I do think about that question a lot, partic- ularly when I see that some of our private competitors are able to be rather bold in statements to the market. We have to be very careful about what we say publicly, so we tend to be more cautious and guarded. By the same token, I think that being public gives us access to sources of capital that would not be

there for us if we were private, and in the long run, this busi- ness is going to be about raising capital, and the cost of capital is going to be a critical dimension to competing in this busi- ness. There is also need for more transparency, not only to the outside world but also internally. I spend much more of my time than I would have imagined communicating, speaking to media, investors, and not only our equity and institutional investors, but also our debt holders, whereas in a private com- pany, these demands are less. But being public has been important for the company, and the communication and trans- parency makes for a healthy management environment. There are a lot of challenges obviously. You need to be prepared to defend the positions that you take.

Aaron: Are there consolidation opportunities in the industry yet?

Carlos: I think it is still early in the cycle, although obviously the Diversa and Celunol merger was a consolidation, but there has not yet been a lot of activity. There is some consolidation going on in the first generation biofuels companies, which is driven by the need to find better operating efficiencies. Our part of the industry is not yet in an operating mode. It is still very much about future promise, and while there might be some opportunities for companies to combine to get new technology, I don’t know that we’re yet at the stage where the advanced biofuels industry needs to consolidate.

Aaron: How has team building differed at Verenium compared with your previous companies?

Carlos: It is a different industry, but a lot of the challenges remain the same. Two years ago, Celunol was a handful of peo- ple. Today we are close to 300 people, so we have grown very rapidly. Again there is no established cellulosic ethanol industry to speak of, so we drawn talent from adjacent industries in biotech, chemicals, power, and other places. This means peo- ple have different norms. They have been working in businesses in very different contexts, so part of my job as CEO is to forge the group into a cohesive operating team. Over the course of the last year, the integration of the two companies has been a unifying team effort.

operating team. Over the course of the last year, the integration of the two companies has
operating team. Over the course of the last year, the integration of the two companies has

22

INTERVIEWS

B

www.compstudy.com

22 INTERVIEWS B www.compstudy.com Aaron: Typically building a company involves establishing a new culture. Certainly

Aaron: Typically building a company involves establishing a new culture. Certainly companies have their own identity and culture. My experience is that industries also tend to have a culture. With Verenium drawing on talent from a range of industries, has this created something of a cultural melting pot?

Carlos: That’s exactly right. In fact, I think the challenge is interesting to consider. If cellulosic ethanol has a characteristic as an industry, I would say that it tends to be currently domi- nated by life science and other science intensive industries where matters such as worrying about intellectual property and secrecy tend to dominate. I feel we have to move as an industry out of that mold and start worrying about our supply chains, relationships with other companies, transparency to the finan- cial community, government relations – all these other issues that more evolved industries have dealt with. I am trying to fos- ter a corporate culture around confidence in our capabilities to execute, rather than feeling that we can be perfectly protected by our patents.

Aaron: How do you recruit people who fit that profile?

Carlos: I try not to hire people for today’s company, but to proj- ect out three to five years, when we could have 1,000 people and six different cellulosic ethanol plants. For instance, we were able to hire a woman to run our specialty enzyme busi- ness who was a very senior executive at BP Chemicals, which was bought out by a private equity group. She has run billion dollar businesses. The question is, how can we attract that kind of talent into what is still a small company? I think one of the things that has benefited us is that this industry has enormous appeal. It has psychological appeal in the sense that there is potentially a disruptive technology to solve one of the great problems of our current age and economy, which is the over- reliance on fossil fuels. There are also benefits in the sense of job satisfaction because we are tackling pressing environmen- tal and energy security issues. These attributes help us attract talent that I think would be otherwise unavailable, and that makes a significant difference.

Aaron: How has the tumult in the public capital markets affected you?

Carlos: One of our challenges is that we are really the only public cellulosic ethanol company. There are other companies developing this technology as part of a larger business, but

public cellulosic ethanol company. There are other companies developing this technology as part of a larger

2008 Compensation & Entrepreneurship Report in Information Technology

23

CARLOS A. RIVA, PRESIDENT & CEO, VERENIUM

we’re the only cellulosic ethanol pure play, and I think what tends to happen to us is we get lumped in with the all the other biofuels companies. Even though our financial risk profile is vastly different from a grain ethanol or bio-diesel companies, we still get compared to them, so we tend to be subject to the rising and falling tides of those industries.

Aaron: Another issue I see when recruiting in the cleantech sector is that many of the target markets for talent, like the chemical or energy industries, are comprised mostly of larger companies that are not historically entrepreneurial. How do you overcome this?

Carlos: Our task is to find the entrepreneurial people in the large companies. These types can be found, and when you do, you can unleash that capability and get a lot of leverage. Fortunately, there are a lot of smaller entrepreneurial busi- nesses springing up in these industries, and they are also are a rich source of talent for us.

Aaron: Where would you like to see the business five years from now?

Carlos: From a technology and commercialization standpoint, I want us to be leaders of the pack in the cellulosic world. I expect that five years from now, we will have operating facilities in the Southeast with various facilities under construction. We will license our technology and technology packages more broadly and likely will be looking to logical places to expand internationally. Given that we’ve done a lot of work on sugar cane and energy cane as a feedstock in the Southeast, we would probably look south to the Caribbean or Brazil as logical areas for expansion. I see our enzyme business also continuing to grow, and I’m very bullish on its potential. Our industry is not going to replace oil, but it can take a big chunk out of future demand for fossil hydrocarbons. Verenium is right at the verge of being able to start to construct commercial facilities. This puts us at the forefront of the advanced biofuels industry, so I want to keep pushing that leadership position and trying to stay ahead of the pack. I believe that once you solidify a leadership position, one can have a sustainable competitive advantage that will allow the company to continue to grow and prosper. This is an industry that in the United States alone, by virtue of the mandate of the last energy bill, will grow to 16 billion gallons a year. At $3.00 a gallon, that’s a $48 billion dollars per year market that nobody owns today. So it’s a race.

a year. At $3.00 a gallon, that’s a $48 billion dollars per year market that nobody
a year. At $3.00 a gallon, that’s a $48 billion dollars per year market that nobody

24 CHIEF

EXECUTIVE

OFFICER

B

Base Salary – 2007 and 2008

• CEO base salary increased 4.2% at the average, from $227,000 in 2007 to $237,000 in 2008.

Bonus – 2007 and 2008

• The average CEO has a target bonus of $102,000 for 2008, which represents 43% of base salary. This compares to an average bonus received in 2007 of $69,000 on a total target bonus of $98,000, an achievement of 71%.

Equity Holdings

• In 2008, current equity held by the CEO ranges from 3.90% at the 25th percentile to 6.50% at the 75th percentile. The aver- age equity holding for the CEO is 5.46%.

• The average time of hire equity grant for the CEO is 5.40% while the median time of hire grant is 5.00%.

Base, Bonus and Equity by Financing Rounds

• Average base salary remains relatively constant through rounds of financing for the CEO. In general, with additional rounds raised, the range of base salary for the CEO becomes tighter. This same trend holds true for CEO bonus.

• Average equity position held by the CEO drops steadily with an increase in financing rounds. For those companies with one or fewer rounds raised, the non-founder CEO holds an average of 6.28% of the company, compared to 4.86% at companies having raised four or more rounds.

Base, Bonus and Equity by Founder Status

• Non-founder total, actual and target, cash compensation is considerably higher than that of the founding CEO, an average of $339,000 for non-founders in 2008 compared to $286,000 for founding CEOs, a 19% premium for non-founders.

• Founding CEOs hold an average of 22.05% of their company, as expected a significantly higher amount than non-founders who had an average of 5.46%.

www.compstudy.com

25th 75th percentile Median percentile KEY: Mean
25th
75th
percentile
Median
percentile
KEY:
Mean

Base Salary – 2007 and 2008

$200 $225 $250 2007 $227 $205 $235 $260 2008
$200
$225
$250
2007
$227
$205
$235
$260
2008

$237

Base Salary by Financing Rounds

$155 $250 $275 ≤ 1 $235 $200 $225 $250 2-3 $236 $220 $240 $265 4+
$155
$250
$275
1
$235
$200
$225
$250
2-3
$236
$220
$240
$265
4+

$238

Base Salary by Founder Status

$205 $235 $260 Non-Founder $237 $162 $195 $229 Founder
$205
$235
$260
Non-Founder
$237
$162
$195
$229
Founder

$197

$240 $265 4+ $238 Base Salary by Founder Status $205 $235 $260 Non-Founder $237 $162 $195
$240 $265 4+ $238 Base Salary by Founder Status $205 $235 $260 Non-Founder $237 $162 $195

2008 Compensation & Entrepreneurship Report in Information Technology

75th

percentile

Actual Bonus Received Target Bonus

25

25th

percentile

25th

75th

percentile

Median

percentile

25th 75th percentile Median percentile Median KEY: KEY: Mean Bonus – 2007 and 2008 $65 $98
25th 75th percentile Median percentile Median KEY: KEY: Mean Bonus – 2007 and 2008 $65 $98

Median

KEY:

75th percentile Median percentile Median KEY: KEY: Mean Bonus – 2007 and 2008 $65 $98 $100
75th percentile Median percentile Median KEY: KEY: Mean Bonus – 2007 and 2008 $65 $98 $100

KEY:

Mean

Bonus – 2007 and 2008

$65 $98 $100 $125 2007 $20 $62 $69 $100 $65 $100 $125 2008
$65
$98 $100
$125
2007
$20
$62 $69
$100
$65
$100
$125
2008
$102 Bonus by Financing Rounds $16 $100 $150 ≤ 1 $113 $65 $100 $125 2-3
$102
Bonus by Financing Rounds
$16
$100
$150
1
$113
$65
$100
$125
2-3
$103
$75
$100
$125
4+
$101
Bonus by Founder Status
$65
$100
$125
Non-Founder
$102
$30
$60
$100
Founder

$88

Mean

Equity Holdings

3.60% 5.00% 7.00% Time of Hire 5.40% 3.90% 5.00% 6.50% Current 5.46%
3.60%
5.00%
7.00%
Time of Hire
5.40%
3.90%
5.00%
6.50%
Current
5.46%

Equity by Financing Rounds

3.00%

7.00%

10.00%

1

5.46% Equity by Financing Rounds 3.00% 7.00% 10.00% ≤ 1 6.28% 4.69% 5.64% 6.50% 2-3 5.88%
5.46% Equity by Financing Rounds 3.00% 7.00% 10.00% ≤ 1 6.28% 4.69% 5.64% 6.50% 2-3 5.88%
5.46% Equity by Financing Rounds 3.00% 7.00% 10.00% ≤ 1 6.28% 4.69% 5.64% 6.50% 2-3 5.88%

6.28%

4.69% 5.64% 6.50%

2-3 5.88% 3.60% 4.90% 6.00% 4+ 4.86% Equity by Founder Status 3.90% 5.00% 6.50% Non-Founder
2-3
5.88%
3.60%
4.90%
6.00%
4+
4.86%
Equity by Founder Status
3.90% 5.00% 6.50%
Non-Founder
5.46%
8.30%
17.00%
30.00%
Founder

22.05%

6.00% 4+ 4.86% Equity by Founder Status 3.90% 5.00% 6.50% Non-Founder 5.46% 8.30% 17.00% 30.00% Founder
6.00% 4+ 4.86% Equity by Founder Status 3.90% 5.00% 6.50% Non-Founder 5.46% 8.30% 17.00% 30.00% Founder

26

CHIEF

EXECUTIVE

OFFICER

B

Cash and Equity Compensation by Headcount

• With increasing headcount, the total target cash compensa- tion for the CEO rises. Total cash ranges from an average of $280,000 in companies with 1-20 FTEs to $390,000 at the largest companies surveyed, those with greater than 75 FTEs.

• Equity holdings for the CEO follow an inverse trend as com- pany headcount grows. Non-founder CEOs in the smallest companies hold 5.88% while those in companies with greater than 75 FTEs see equity holdings reduced to 4.99%.

Cash and Equity Compensation by Geography

• Base salary across the geographies shows little variance out- side the West region, where base salary is 9% lower than the average across the regions.

• Target bonuses in California and the Mid-Atlantic are the lowest among the regions. However, base salary in California is highest at an average of $247,000.

Cash and Equity Compensation by Business Segment

• CEOs at Content/Information companies earn the highest total cash package in our report with a total base and target bonus of $364,000. Additionally, equity holdings in this seg- ment are also highest for the CEO at 7.10%.

• Equity holdings among CEOs in the Communications sector are lowest at just under 3.82% at the average.

Cash and Equity Compensation by Revenue

• Average total cash compensation for the CEO correlates directly with rising company revenues. In the pre-revenue segment, the non-founder CEO earns an average total cash package of $288,000 while holding 5.78% of the equity of the company.

• Equity holdings generally decrease in direct proportion with increasing revenues, though there is a spike in companies with $5-10M in revenue. CEOs in these companies hold the highest average level of equity at 5.93%.

www.compstudy.com KEY: Salary Bonus
www.compstudy.com
KEY:
Salary
Bonus

Cash Compensation by Headcount (FTEs)

$280 $77 $203
$280
$77
$203

1-20

$319

$99

$220

21-40

$347

$106

$241

41-75

$390

$115

$275

76+

Cash Compensation by Geography

$345

$98

$247

California

$343

 

$358

$327

 

$107

$90

$121

$236

$237

$237

New

Mid-

Midwest

England

Atlantic

$322

$107

$215

West

$351

$106

$245

South

Cash Compensation by Business Segment

$350

$112

$238

$328

$90

$238

$315

$336

 

$81

$97

$234

$239

$364

$123

$241

$321

$92

$229

Software

Communications

Hardware,

Services,

Content,

CleanTech

 

Semiconductors,

Consulting,

Info

Electronics

Integration

Provider

Content, CleanTech   Semiconductors, Consulting, Info Electronics Integration Provider
Content, CleanTech   Semiconductors, Consulting, Info Electronics Integration Provider

2008 Compensation & Entrepreneurship Report in Information Technology

KEY:

Average
Average

Equity by Headcount (FTEs)

5.88%

1-20

5.11%

Average Equity by Headcount (FTEs) 5 . 8 8 % 1-20 5.11% California 5.64% 5.79% 21-40

California

5.64%

Headcount (FTEs) 5 . 8 8 % 1-20 5.11% California 5.64% 5.79% 21-40 5.31% 41-75 Equity

5.79%

21-40

5.31%

5 . 8 8 % 1-20 5.11% California 5.64% 5.79% 21-40 5.31% 41-75 Equity by Geography

41-75

Equity by Geography

6.11%

New

England

6.19%

Mid-

Atlantic

5.01%

6.11% New England 6 . 1 9 % Mid- Atlantic 5.01% Midwest 5.63% West Equity by

Midwest

5.63%

New England 6 . 1 9 % Mid- Atlantic 5.01% Midwest 5.63% West Equity by Business

West

Equity by Business Segment

3.82%

5.01% Midwest 5.63% West Equity by Business Segment 3.82% 5.51% 6.96% 7.10% 4.99% 76+ 5.07% South

5.51%

Midwest 5.63% West Equity by Business Segment 3.82% 5.51% 6.96% 7.10% 4.99% 76+ 5.07% South 4.45%

6.96%

7.10%

4.99%

Equity by Business Segment 3.82% 5.51% 6.96% 7.10% 4.99% 76+ 5.07% South 4.45% Software Communications

76+

5.07%

5.07% South 4.45%

South

4.45%

3.82% 5.51% 6.96% 7.10% 4.99% 76+ 5.07% South 4.45% Software Communications Hardware, Services,

Software

Communications

Hardware,

Services,

Content,

CleanTech

 

Semiconductors,

Consulting,

Info

Electronics

Integration

Provider

27

Cash Compensation by Revenue

$419 $374 $330 $139 $310 $105 $288 $107 $91 $61 $280 $269 $227 $219 $223
$419
$374
$330
$139
$310
$105
$288
$107
$91
$61
$280
$269
$227
$219
$223
Pre-
Up to $5M
$5 – 10M
$10 – 20M
$20M+
Revenue
Equity by Revenue
5.93%
5.78%
5.37%
5.10%
4.96%
Pre-
Up to $5M
$5 – 10M
$10 – 20M
$20M+

Revenue

CHIEF

EXECUTIVE

OFFICER

5.93% 5.78% 5.37% 5.10% 4.96% Pre- Up to $5M $5 – 10M $10 – 20M $20M+
5.93% 5.78% 5.37% 5.10% 4.96% Pre- Up to $5M $5 – 10M $10 – 20M $20M+

28 PRESIDENT/

COO

B

Base Salary – 2007 and 2008

• President/COOs saw a small increase in average base salary in 2008, rising $5,000 or 2.8% over 2007.

Bonus – 2007 and 2008

• Average target bonuses decreased slightly in 2008 for the average President/COO, from $63,000 in 2007 to $58,000 in 2008. Actual average bonus paid in 2007 was $55,000, which represents an attainment rate of 88%.

Equity Holdings

• The average current equity holding for the President/COO is 2.88%. Time of hire grants range from .80% at the 25th per- centile to 2.60% at the 75th percentile. The average time of hire grants falls very close to the top quartile at 2.58%.

Base, Bonus and Equity by Financing Rounds

• President/COOs at companies with one or fewer financing rounds earned, on average, $31,000 less in base salary than their counterparts at companies with four or more rounds of financing raised.

• Equity holdings for President/COOs with one or fewer rounds is 4.98% at the average. With dilution from additional rounds raised, the average equity holding decreases to 2.05% in those companies having raised four or more rounds.

Base, Bonus and Equity by Founder Status

• Cash compensation for founding President/COOs varies largely when compared to their non-founder counterparts.

• Founding President/COOs hold a 15.43% average equity stake in their companies, compared to 2.88% for non-founders.

www.compstudy.com

25th 75th percentile Median percentile KEY: Mean
25th
75th
percentile
Median
percentile
KEY:
Mean

Base Salary – 2007 and 2008

$155 $175 $200 2007 $178 $165 $180 $200 2008 $183 Base Salary by Financing Rounds
$155
$175
$200
2007
$178
$165
$180
$200
2008
$183
Base Salary by Financing Rounds
$150
$158
$175
1
$162
$165
$190
$200
2-3
$182
$172
$188
$210
4+
$193
Base Salary by Founder Status
$165
$180
$200
Non-Founder
$183
$160
$182
$225
Founder

$191

$188 $210 4+ $193 Base Salary by Founder Status $165 $180 $200 Non-Founder $183 $160 $182
$188 $210 4+ $193 Base Salary by Founder Status $165 $180 $200 Non-Founder $183 $160 $182

2008 Compensation & Entrepreneurship Report in Information Technology

75th

percentile

Actual Bonus Received Target Bonus

29

25th

percentile

25th

75th

percentile

Median

percentile

25th 75th percentile Median percentile Median KEY: KEY: Mean Bonus – 2007 and 2008 $30 $50
25th 75th percentile Median percentile Median KEY: KEY: Mean Bonus – 2007 and 2008 $30 $50

Median

KEY:

75th percentile Median percentile Median KEY: KEY: Mean Bonus – 2007 and 2008 $30 $50 $63
75th percentile Median percentile Median KEY: KEY: Mean Bonus – 2007 and 2008 $30 $50 $63

KEY:

Mean

Bonus – 2007 and 2008

$30 $50 $63 $80 2007 $11 $32 $55 $60 $25 $50 $80 2008 $58 Bonus
$30
$50
$63
$80
2007
$11
$32
$55 $60
$25
$50
$80
2008
$58
Bonus by Financing Rounds
$9
$30
$80
1
$49
$42
$50
$80
2-3
$67
$15
$43
$80
4+
$52
Bonus by Founder Status
$25
$50
$80
Non-Founder
$58
$41
$51
$120
Founder

$108

Mean

Equity Holdings

0.80% 1.00% 2.60% Time of Hire 2.58% 1.00% 1.50% 4.00% Current 2.88% Equity by Financing
0.80%
1.00%
2.60%
Time of Hire
2.58%
1.00%
1.50%
4.00%
Current
2.88%
Equity by Financing Rounds
0.10%
1.50%
6.00%
1
4.98%
1.00%
2.15%
4.00%
2-3
2.79%
1.00% 1.30% 2.00%
4+
2.05%
Equity by Founder Status
1.00% 1.50% 4.00%
Non-Founder
2.88%
4.55%
9.00%
26.90%
Founder

15.43%

2.00% 4+ 2.05% Equity by Founder Status 1.00% 1.50% 4.00% Non-Founder 2.88% 4.55% 9.00% 26.90% Founder
2.00% 4+ 2.05% Equity by Founder Status 1.00% 1.50% 4.00% Non-Founder 2.88% 4.55% 9.00% 26.90% Founder

30 PRESIDENT/ COO

B

Cash and Equity Compensation by Headcount

• Total cash compensation for President/COOs rises steadily with increasing headcount levels, from $223,000 at the earli- est stages to $269,000 for those companies with more than 75 FTEs.

• President/COOs average equity holdings decreased gradually as company headcount grows, though for the largest compa- nies, there is a spike in holdings for the President/COO.

Cash and Equity Compensation by Geography

• Total cash compensation is highest for President/COOs in California and New England, driven primarily by the two largest base salary levels among regions.

• Mid-Atlantic and New England President/ COOs hold a greater stake in equity when compared to the overall average.

Cash and Equity Compensation by Business Segment

• President/COOs of Software and Content/Information Providers earn the highest total cash compensation in 2008 at just under $250,000 at the average, though their counter- parts in the Software segment are a very close second.

• President/COOs of within the CleanTech sector hold the largest equity stake at 4.76%.

Cash and Equity Compensation by Revenue

• Average total cash compensation for the President/COO is greatest for companies with $20M or more revenues at

$305,000.

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Cash Compensation by Headcount (FTEs)

$223

$67

$156

1-20

$232

$52

$180

21-40