One of the most popular search topics on my blog has always been compensation. I thought I would lay out historically the average benchmarks with some caveats. The first caveat is that these numbers will be skewed more towards an early/expansion stage company versus a start-up or late stage companies. The second is that with conditions worsening, a lot of companies are going to need to ask employees to take across the board pay cuts (usually in exchange for some equity) to stretch the runway out. The third is that these are non-founders stats. Founders will have much higher equity and lower salary. The fourth is that each situation is different, as is each employee, so there are trade-offs between salary and equity. That said:
Salary $180-200k, bonus $50k+, equity around 5-7%
Salary $150-175k, bonus $50-75k, equity around 2%
Salary $150-$175k, bonus $50k, equity 1-1.5%
Salary $150k, bonus tied to sales (usually in the $50-75k+ range), equity of 1-2%
Other VP spots
Salary $140-150k, bonus $25-50k, equity 0.75-1%
Director and below
The market will dictate these. Directors usually in the $110-130k range, key programmers in the $90-120k range, controller in the $50-80k range depending on experience.
Again, these are very rough cuts. For example, a rock star CEO could easily end up at $225-$250k, $75-100k bonus. Also, I can't emphasize enough that in this current cycle, having runway (target at least 18-24 months, 12 months minimum) is your key lifeline. If you are not there, you need to sit your team down and discuss an across the board pay cut (with equity bonus tied to goals). You need to do this now so that the company has a number of months of benefit from it to stretch out the runway. Firms almost always wait too long, hoping that things will turn, and start efforts like pay cuts with only a couple of months to go. This does little to impact the runway as you have too few pay periods of savings.
Just remember: I have never (yes, never) heard a CEO bemoaning the fact that he/she reduced his/her burn too soon. I have frequently heard them comment that they wish they had done so 6-8 months earlier.
One thought on “What Compensation Should You Give Your Team?”
At least for the silicon valley, a “key programmer” (a director-level software engineer) makes over $200K (salary + bonus) at a large company. Assuming a silicon valley-sized mortgage and a family to feed, a salary under $120K will mean a vast majority of excellent senior engineers will not be able to afford to work for this start-up.
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