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Pricey SaaStr: What Are The Typical Elements of CEO Compensation? How are CEO Contracts Usually Structured?

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Pricey SaaStr: What are the standard parts of a CEO’s compensation? How are CEO contracts usually structured? 

I’ll reply this from a start-up perspective, and assume you imply bringing in an out of doors CEO to run your start-up.

Most “outdoors” CEOs, which might be introduced in to run a start-up, can be on the lookout for 6-8% fairness within the firm.  Perhaps 4-5% if it’s mid-stage.

How that vary grew to become the magic quantity I’ve no clear concept, however it’s the vary.

In some circumstances, they’ll additionally search partial anti-dilution safety if a fundraising is imminent (or even when it isn’t).  I.e., 7% … however after the subsequent spherical.  This may increasingly sound grasping or egocentric to an outsider, however from the CEO’s perspective, the truth that substantial dilution is coming and already essential isn’t her “fault” … so why pay for it?  If the corporate is nearly out of cash and I’ve to go promote 30% of the corporate to maintain it afloat, why ought to I be diluted by that elevate?

By way of money, it varies.  However they’ll be on the lookout for greater than anybody else within the firm makes.  Assume $250k per 12 months as a straw-man, plus bonus.  Most outdoors CEOs that be part of after an enormous spherical, or $15m-$20m, will b anticipating at the very least a $350k-$400k.

Additionally, at a extra sensible degree, the all-in fairness dilution can be far greater most often.  A brand new CEO will typically rapidly herald his personal, typically extra “senior”, administration workforce.  This generally is a superb factor.  However assume one other 5% of the corporate goes to new administration you won’t have in any other case budgeted for.  And that the brand new CEO additionally seeks to develop the inventory possibility pool by one other 8-10% to account for different new hires as effectively.

A associated put up right here:

The All-In Dilution from an Exterior CEO: Simply Make Positive You Do the Math

 

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