The median private company CEO compensation package totaled $362,900 in 2011 — just 3.8% of the $9.6 million median compensation package given to S&P 500 CEOs.
Median total compensation for private company CEOs increased only 1.9% from 2010’s $356,133.
The Board of Directors sets CEO pay in 58.5% of all private companies, but for companies with $100 million or more in annual revenue, this number increases to 73.9%.
Only 54.4% of private companies have formal long-term incentive plans for executives, but this number increases to over 68% for companies backed by private equity investors. There is high correlation between a company’s profitability and whether or not they have formal long term incentive plans for executives.
This is a line that was pretty common in Silicon Valley until recently. Steve Jobs even (ab)used that line on Dropbox when trying to buy them out of the market (They turned him down.)
Now that’s all changed, for the moment. The threshold for “company” status is very low, including the following list of minimum pieces at their lowest cost.
1) a url – $10 2) incorporation – $200 3) Internet – free 4) build a website – free 5) development tools – free 6) office space – free – home, starbucks, hipster coffee shop
In other word, the barriers have dropped if you’re willing to do most things yourself, which is a good thing. You still need an amazing idea , business model, some focus from a developer (critical!). You can create a single feature “disposable” company, nothing wrong with that, it’s a learning experience, fail fast, etc., it might even create some value and get acq-hired. And It’s a lot better than talking to folks for a year about an idea that never materializes.
But that’s not the way to create a company that can live and grow for years. In doing that you have to be honest with yourself, make some sacrifices and seek continuous enhancement of your entity. In the world of easy startups, everything is a startup, people drink their own koolaid too much.
Here are some great ways to maybe move into higher ground:
- Seek outside criticism and listen to it. Put on your flack jacket and let ’em rip you up. Be open to changes but don’t be a wimp either. You may see something nobody else does, but listen.
- Pay those you ask to help you – money, equity, trade services, something meaningful. Give them incentive to help you think straight. Make sure you pick the right mentors with track records. Never ask for something for nothing, you’ll get what you pay for and a bad reputation fast. Better yet, pay it forward. This is an area where strong developers actually have a lot to trade these days, but usually try to do everything themselves. Not likely to succeed.
- Diversify – get people difeerent than you involved as team members – different genders, races, ages, expertises. Here’s a great 3 minute talk on this by Stanford prof Kathy Eisenhardt http://j.mp/UaVjky
So look for the opportunity to build a company, share the wealth, and seek higher ground.
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Here’s the stock ownership of principals at Facebook at IPO time earlier this year, interesting to see Mark Zukerberg’s amount vs. others.