VC Confidential: What Compensation Should You Give Your Team? | Hacker News Reader

VC Confidential: What Compensation Should You Give Your Team?

vcconfidential.com

19 pointsjkopelman13 comments

"Across-the-board pay cut."

So, in this scenario you've got the suits making 2x-4x what the people who build the product are making, yet everyone is expected to take the same percentage cut in salary. (Nevermind the fact that the lower-ranking employees are probably just getting by!)

Remember how just a few weeks ago, everyone was complaining that CEO pay is drastically out of touch with performance? This is how it starts.

I'm not sure that "across-the-board" means the same percentage for everyone. It could just mean everyone's pay gets cut.

But I'm going to go out on a limb here and guess that in a company where the CEO is overpaid, he's not going to take a real big pay cut voluntarily.

Yeah, I thought about that, too. But even if the cut is graded, it doesn't seem right to cut the pay of people who are just getting by and living on their salary, when the executives are earning a comfortable premium over living expenses, plus equity.

Cut the pay of a $300k CEO, and maybe he waits a bit to buy his next $1,000 Eames chair. Cut the pay of the $60k graphic designer, and she takes roommates and eats ramen (in the bay area; obviously, the numbers change in Podunk, IA).

Please maintain these pay rates. It gives my competitors and potential competitors higher burn rates, and makes acquisition much easier when the alternative is actually building.

Agreed. These numbers are absolutely nuts. (That's not to say they're not common, but they're crazy.)

Do startups normally have bonuses?

Post Series-A, it is somewhat common though not universal. Once you start adding employees who don't hold significant amounts of equity, you have to create meaningful performance incentives. The best way to do that is with a monetary bonus.

Also, remember, all of these numbers are for non-founding positions.

Josh, how was half.com's compensation structured :) ?

Are stock options the same thing as equity?

If not what are the pros and cons of each?

Yes, any amount of stock ownership-- or potential ownership, as with options-- is considered "equity." Although these numbers in percentages are skewed-- in fact, the actual equity compensation is obviously spread over four years. So to put the percentage equity share owned after four years next to the yearly salary is somewhat misleading.

How universal do you find these salaries are? I imagine they would vary a great deal by the size of the startup. Is that the case or not?

There is actually a pretty detailed annual survey of VC-backed startup executive comp. The data covers the top 10-ish execs at hundreds of surveyed companies and reports it by revenue, headcount, capital raised, geography and more. If you want more info, check this out: http://www.altgate.com/blog/2008/01/2007-it-startup.html

75k Bonus!?!?

How about a liquidation event bonus?

That seems more reasonable.

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