2013 Senior Management Compensation Survey

Transcription

1 2013 Senior Management Compensation Survey

2 Attached are the results of the 2013 River Cities Capital Funds Senior Management Compensation Survey. Twenty-four private-growth companies from the IT and healthcare sectors participated in this year s survey. Firms provided data on compensation components cash and stock for senior management and independent directors. In addition, data was collected with respect to D&O insurance and audit expenses. Data was collected between June-July with compensation for 2013; TTM revenue and company head count is noted as close to December 2012 as possible. The survey data is illustrated in the eight attached exhibits. 1) Exhibit 1 Numeric Summary: a) On average, CEOs have a base salary of $276K, target bonus of $131K and 3% in options (or 25% of all options granted). b) Target bonuses and commissions provided an average of 37% leverage over base salaries. c) On average, the VP of Sales had the most leverage over base salaries at 58%, followed by the CEO and VP of Business Development at 45% and 44% respectively. d) On average, option pools accounted for 11% of fully-diluted ownership for the senior management. 2) Exhibit 2 CEO Compensation versus Company : The analysis shows that CEOs who manage more people tend to receive a higher salary and higher total cash compensation. 3) Exhibit 3 CEO Compensation versus Company TTM Revenue : The analysis shows that CEOs who run companies with higher revenue generally receive more compensation. The relationship is slightly more substantial than that of the relationship between CEO salary and company head count. 4) Exhibit 4 CEO Option Ownership Percentage versus Size of Company : According to the analysis, the larger the company (measured by head count or TTM revenue), the less options the CEO received. 5) Exhibit 5 Senior Management Compensation versus Company : The analysis shows that the management teams (per senior executive) of large companies (measured by head count) tend to receive slightly higher salaries. The analysis also showed a meaningful relationship between senior management total compensation and the size of the respective company (measured by head count) the larger the company, the higher the total compensation. 6) Exhibit 6 D&O Coverage and D&O Premium : The analysis shows a strong relationship between size of D&O Coverage and the D&O Annual Premium with few variances. The most popular coverage amounts are $3M and $5M, with 6 companies choosing each of those coverage amounts. The analysis also shows companies with higher TTM revenue tend to have higher premiums and only slightly higher coverage amounts. 7) Exhibit 7 Independent Director : The analysis shows that larger companies (by head count and TTM revenue) tend to offer less option ownership to independent directors given option ownership remuneration. There is less of a relationship between independent director cash remuneration and TTM revenue and little or no correlation between independent director cash remuneration and head count. 2

3 Out of the 17 companies with independent directors, seven compensate with options only; six compensate with both cash and options; and four compensate with cash only. The average option and cash compensation were at 0.56% (options on a fully diluted basis) and $14K per director per year, respectively. 8) Exhibit 8 Audit Fees : The analysis shows that companies with higher head count and TTM revenue tend to have higher Audit Fees. For further information about this report, please contact Parag Rathi (prathi@rccf.com). 3

4 Title Chairman/CEO 2013 River Cities Capital Funds Senior Management Compensation Survey Numeric Summary Exhibit 1 100% Total Percent of Option Annual Salary of Goal * 100% of Goal * 100% of Goal * Option Pool** Ownership** Full Ownership^ $276,203 $130,532 $401, % $165,000 $426,900 $45,000 $292,500 $225,000 $682, % 47.93% 0.59% 5.91% 0.02% 25.87% 3.13% 7.52% COO/President $229,488 $98,375 $327, % 1.74% 3.03% $130,000 $310,000 $25,000 $247,500 $175,500 $495, % 20.12% 0.45% 3.84% 0.66% 11.76% CFO $189,858 $71,758 $261, % 1.13% 1.26% $121,000 $250,000 $19,648 $220,000 $140,648 $440, % 18.00% 0.001% 3.55% 0.10% 3.74% Controller $120,104 $30,965 $143, % 0.33% 0.37% $45,405 $235,000 $4,000 $78,876 $45,405 $305, % 15.68% 0.02% 0.89% 0.02% 1.14% CTO $177,253 $57,400 $228, % 0.55% 3.28% $81,081 $292,000 $12,901 $160,600 $81,081 $452, % 18.96% 0.06% 1.12% 0.06% 25.87% VP Development $171,329,106 $221, % 0.45% 0.67% $130,000 $230,279 $10,000 $115,140 $140,000 $345, % 9.15% 0.01% 1.00% 0.01% 1.95% VP Bus Dev $188,228 $59,771 $65,553 $254, % 1.43% 1.94% $115,000 $263,000 $10,000 $131,500 $15,000,000 $125,000 $394, % 36.49% 0.11% 8.15% 0.20% 8.53% VP Marketing $160,208 $36,041 $30,000 $195, % 0.58% 0.68% $95,000 $210,000 $10,314 $69,000 $30,000 $30,000 $109,250 $279, % 15.68% 0.17% 1.69% 0.20% 1.76% VP Sales ,750 $80,850 $138,833 $320, % 1.11% 1.28% $130,000 $45,500 $162,000,000,000 $175,500 $486, % 34.49% 0.48% 3.00% 0.48% 3.00% Totals Independent Directors $1,715,422 $615,798 $234,387 $2,355, % 10.47% 20.04% 24 Companies Participating 37.3% Leverage Over 100% of Goal NA NA 17 $14,058 $14,058 NA NA 0.56% $5,000 $25,000 $5,000 $25,000 NA NA NA NA 0.08% 1.67% * Note: Bonus and Commission averages were computed only across those companies identifying bonus or commission, and therefore reflect the averages only in cases where they were awarded. Therefore, in most cases, average Annual Salary, Bonus and Commission will not sum to average Total Cash Compensation. ** Note: Percent of Option Pool measures the portion of the option pool allocated to the title. The corresponding total provides a measure of the concentration of the option pool within the senior management. Option Ownership is on a fully diluted basis. ^ Full Ownership is Option Ownership plus Stock Ownership outside of the option pool. KEY: No. of Observations Title/Position Average Val Min Val Max Val 4

5 Exhibit 2a Exhibit 3a CEO Salary Only vs. ₁ CEO Salary Only vs. TTM Revenue₂ $450 $450 $400 $400 $350 $350 CEO Salary Only (00) $250 $150 CEO Salary Only (00) $250 $150 $10,000,000 $30,000 $40,000,000 TTM Revenue (00) Exhibit 2b Exhibit 3b CEO Total Cash Compensation vs. ₁ CEO Total Cash Compensation vs. TTM Revenue₂ $800 $700 CEO Total Compensation (00) $700 $600 0 $400 CEO Total Compensation (00) $600 0 $ $10,000,000 $30,000 $40,000,000 TTM Revenue (00) ¹Two companies with head count in excess of 500 have been excluded. ²Four companies with TTM Revenue in excess of M have been excluded. 5

6 Exhibit 4a Exhibit 5a Fully Diluted Option Ownership 7% 6% 5% 4% 3% 2% 1% 0% CEO Option Ownership Percentage vs. ₁ Senior Management Salary (Per Executive) (00) $250 $150 Senior Management Salary (Per Executive) vs. ₁ Exhibit 4b Exhibit 5b 7% CEO Option Ownership Percentage vs. TTM Revenue₂ $3,000 Senior Management Team Total Cash Compensation vs. ₁ Fully Diluted Option Ownsership 6% 5% 4% 3% 2% 1% 0% $10,000,000 $30,000 $40,000,000 TTM Revenue (00) Senior Management Team Combined Total Compensation (00) $2,500 $2,000 $1,500 $1,000 0 ¹Two companies with head count in excess of 500 have been excluded. ²Three companies with TTM Revenue in excess of M have been excluded. 6

7 Exhibit 6a Exhibit 6c $8,000 D&O Coverage vs. D&O Premium $6,000 D&O Coverage vs. TTM Revenue₁ $7,000 $5,000 D&O Coverage (00) $6,000 $5,000 $4,000 $3,000 $2,000 $1,000 D&O Coverage (00) $4,000 $3,000 $2,000 $1,000 $10 $30 $40 $60 $70 $10,000,000 $30,000 $40,000 D&O Premium ('000) TTM Revenue ('000) Exhibit 6b Exhibit 6d 7 D&O Coverage Amounts $45 D&O Premium vs. TTM Revenue₁ 6 $40 Frequency D&O Premium (00) $35 $30 $25 $15 $10 $5 0 $1 $2 $3 $4 $5 >$5 D&O Coverage (M) $10,000,000 $30,000 $40,000 TTM Revenue ('000) ¹Four companies with TTM Revenue in excess of M have been excluded. 7

8 Exhibit 7a Exhibit 7c 1.80% Independent Director Options Ownership vs. TTM Revenue₂ $30 Independent Director Cash Remuneration vs. TTM Revenue₂ Independent Director Ownership % 1.60% 1.40% 1.20% 1.00% 0.80% 0.60% 0.40% 0.20% Cash Remuneration (00) $25 $15 $10 $5 0.00% $10,000,000 $30,000 $40,000,000 TTM Revenue (00) $10,000,000 $30,000 $40,000,000 TTM Revenue (00) Exhibit 7b Exhibit 7d 1.80% Independent Director Options Ownership vs. ₁ $30 Independent Director Cash Remuneration vs. ₁ Independent Director Ownership % 1.60% 1.40% 1.20% 1.00% 0.80% 0.60% 0.40% 0.20% Cash Remuneration (00) $25 $15 $10 $5 0.00% ¹One company with head count in excess of 500 have been excluded. ²Two companies with TTM Revenue in excess of M have been excluded. 8

9 Exhibit 8a Audit Fees vs TTM Revenue₁ $90 $80 Audit Fees (00) $70 $60 $40 $30 $10 $10,000,000 $30,000 $40,000,000 TTM Revenue ('000) Exhibit 8b $180 Audit Fees vs. ₂ $160 $140 Audit Fees (00) $120 $80 $60 $ ¹Four companies with TTM Revenue in excess of M have been excluded. ²Two companies with head count in excess of 500 have been excluded. 9