Startup general interest

CEO salaries

By August 23, 2012 9 Comments

Seth Levine of the Foundry Group has a blog post up today on CEO and founder salaries. His data is US based and it ties pretty well with what we see over here. Apparently these numbers are based on ‘hundreds of data points’ and hold for all areas of the US, including Seth’s home in Boulder, New York and San Francisco:

companies that have raised $1M or less tend to pay their CEO between $75k and $125k (skewed very much to the low end of that scale – companies that have raised less than $500k tend to top out at $75k for CEO comp). Companies that have raised between $1M and about $2.5M tend to pay their CEOs around $125k. Companies who have raised above that amount skew up from there

I’ve been saying for years now that founder salaries should start at these sorts of levels and then rise to what would be market for the skillset in a larger company environment as the company gets to scale and/or profitability. That makes sense to me because higher salaries earlier on have a disproportionately large impact on the amount of cash left for other hires, and less people in the company means slower progress and slower appreciation in value. If a founder has a decent shareholding and believes in what he or she is doing then they wouldn’t want to trade higher salary now for growth in share price. The major caveat being, as Seth points out, that we’ve all got to eat, and it is counterproductive if salaries are so low as to cause stress and heartache at home.