CEO and Senior Executive Compensation in Private Companies

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1 CEO and Senior Executive Compensation in Private Companies EXECUTIVE SUMMARY Thank you for completing our 2015 Survey. Here is an executive summary based on last year s survey. We will also send you an executive summary of this year s survey when it is completed in July. About the Research Chief Executive Research surveyed 1,351 companies in April and May of 2014 about their 2013 fiscal year compensation levels and practices, as well as their expected cash compensation levels for senior executives in Data from the 1,250 private companies that responded are included in our acclaimed annual CEO & Senior Executive Compensation Report for Private Companies. We received responses from private companies providing detailed data about compensation packages for ten senior executive positions, as well as comprehensive information about executive compensation policies and practices. The substantial response provided meaningful data for companies across revenue ranges, industries, regions, and ownership types, with diverse profitability and growth trajectories. While most data sources on CEO compensation focus on the largest public companies, our research gives truer insight into the compensation of CEOs of the approximately 6 private companies with employees, not the misrepresentative S&P 500. Please see the full report for complete compensation data broken down by company demographics and performance.

2 $2,500,000 Total CEO Compensation and Mix Base Salary Bonus New Equity Equity Gains Benefits Perks $2,000,000 $1,500,000 $1,000,000 $500,000 25th Percen/le Median 75th Percen/le Average 2013 CEO Compensation The average private company CEO total compensation package for 2013 was $2,077,605. This figure includes base salary, bonus, equity appreciation, new equity/option grants, benefits, and perquisites. Average cash compensation (base salary and bonus) was $662,404. The average total compensation figure is significantly higher than the median total compensation, as CEOs at the largest companies have pay packages substantially greater than those at smaller companies, pushing up the average. In addition, a small percentage of CEOs had liquidity events (their companies were sold and/or revalued), driving up average equity gains well above the median. The median total compensation package for CEOs totaled $378,000. The median cash compensation (base salary and bonus) was $343, % of the total compensation package. The vast majority of CEOs in the study did not record an equity appreciation over the past year, nor did they receive any new in- the- money options or equity grants. CEO Compensation is Highly Correlated with Company Size and Success Private company CEO compensation is very highly correlated with the size of the company, both in terms of revenue (as the chart on the following page demonstrates) and number of employees. The larger and more complex an organization is, the more substantial the compensation package provided to the CEO. The mix between base salary and at risk compensation (bonuses and equity incentives) also shifts dramatically by size of company (as well as by other variables such as industry and type of ownership) Chief Executive Group, LLC. All Rights Reserved. 2

3 The median total compensation package for CEOs of companies with over $1 billion in revenue is more than double that of CEOs whose companies generate between $100- $250 in revenue. For companies with between $10-25 in revenue, the median CEO earns less than a quarter of the total compensation of CEOs of the largest companies in our survey. Median CEO Total Compensation by Company Revenue as a % of Overall Median Total Compensa-on as a % of Overall Median 350.0% 300.0% 250.0% 200.0% 150.0% 100.0% 50.0% 0.0% <$2 $2 to $4.9 $5 to $9.9 $10 to $24.9 $25 to $49.9 Overall Median $50 to $99.9 $100 to $249.9 $250 to $499.9 $500 to $999.9 $1 billion to $10 billion 2015 Chief Executive Group, LLC. All Rights Reserved. 3

4 CEO Compensation Varies by Ownership Type Median Total CEO Compensation by Ownership Type $500,000 $450,000 $400,000 $350,000 $300,000 $250,000 $200,000 $150,000 $100,000 $50,000 Base Salary Bonus New Equity Equity Gains Benefits Perks Sole Proprietorship Partnership Family Owned Employee Owned Venture Capital Owned Private Equity Owned Other There are a variety of types of private company ownership: sole proprietorships, partnerships, family businesses, employee owned, private group of outside investors (e.g. angel investors), private equity backed, and venture capital backed. CEO compensation varied substantially based on the ownership type of the company. CEOs of private equity backed companies had the highest total compensation packages, while sole proprietors had the lowest. The median private equity backed CEO compensation packages was more than 60% higher than that of sole proprietor CEOs Chief Executive Group, LLC. All Rights Reserved. 4

CEO Compensation by Industry $500,000 $450,000 $400,000 $350,000 $300,000 $250,000 $200,000 $150,000 $100,000 $50,000 Top 6 industries for Median Total CEO Compensation Base Salary Bonus New Equity

5 CEO Compensation by Industry $500,000 $450,000 $400,000 $350,000 $300,000 $250,000 $200,000 $150,000 $100,000 $50,000 Top 6 industries for Median Total CEO Compensation Base Salary Bonus New Equity Equity Gains Benefits Perks Financial / Insurance Restaurant / Food / Beverage / Tobacco Energy / U/lity / Oil / Gas Media / Publishing / Prin/ng Adver/sing / Consumer Goods Marke/ng / Sales Manufacturing The full research report provides detailed compensation information for 17 different industries. The top 6 industries for median total CEO compensation were Financial/Insurance, Restaurant/Food/Beverage/Tobacco, Energy/Utility/Oil/Gas, Media/Publishing/Printing, Advertising/Marketing/Sales, and Consumer Goods Manufacturing Chief Executive Group, LLC. All Rights Reserved. 5

Senior Executive Compensation $300,000 Median Total Compensation by Senior Executive Title Base Salary Bonus Equity Benefits Perks $250,000 $200,000 $150,000 $100,000 $50,000 Chairman President COO

6 Senior Executive Compensation $300,000 Median Total Compensation by Senior Executive Title Base Salary Bonus Equity Benefits Perks $250,000 $200,000 $150,000 $100,000 $50,000 Chairman President COO CFO CMO CSO CIO R&D HR As expected, compensation varies by job title and responsibility. After the CEO, the most highly compensated senior executive position is President, with a median total compensation package of $280,000, followed by the senior operations executive (COO), with a median total compensation package of $222,500. Consistently with prior years of research, Chairmen in our survey received relatively low compensation. In fact, the median base salary for Chairmen was just $50,000 for Empirical evidence suggests that Chairman in private companies often have substantial equity positions, therefore many forego cash compensation unless they are actively involved in daily operations. There were significant variations for compensation in the above titles by company size, industry, ownership type, level of growth, profitability, and other factors. Complete breakdowns of how senior executive compensation varies by these factors are available in the full report Chief Executive Group, LLC. All Rights Reserved. 6

7 Compensation Best Practices Compensation is a strategic tool to align a company's most important talent with the overall business strategy. Properly crafted, an executive compensation plan will attract top- notch talent, retain best performing executives, motivate the leadership team to succeed, and help ensure the company's goals are being reached. The best performing companies use incentive- based compensation to achieve the aforementioned goals. However, 51.2% of companies in our research do not have formal long- term incentive plans. Among companies that do have a formal long- term incentive plan, only 30.2% use performance- based vesting as opposed to time- based. Further, more than half of private companies do not have their company value appraised at regular intervals, meaning senior executives have no idea what their equity- linked incentives are truly worth. Based on our comprehensive research, most private companies spend a significant amount of money on executive compensation, but they are not spending it optimally as a strategic tool. There is great leverage in refining one s executive compensation programs to align key executives incentives for outstanding vs. average performance. For More Information More detailed information (including quartiles) on base salaries, bonuses, equity grants and gains, benefits, perks, and company compensation policies and practices - - and how these elements vary by company size, industry, ownership type, geographic region, and other key variables - - is available in the full report. For additional information about the CEO & Senior Executive Compensation Report for Private Companies, please visit ChiefExecutive.net/compreport. As a 2015 survey participant, you can pre- order the new report (which will come out in August) for a discounted price of $1,495 (a 50% discount off the list price) and get instant digital access to the current edition for free by using the source code CompRespondent2015". To order both, please go to the order page at Chief Executive Group, LLC. All Rights Reserved. 7

2018 Global Top 250 Compensation Survey

December 2018 2018 Global Top 250 Compensation Survey Compensation of Chief Executives and Chief Financial Officers 2018 Global Top 250 Compensation Survey FW Cook and FIT Remuneration Consultants, the