Founders Retaining Majority Stake of Their Companies, According to Technology Executives Roundtable Survey

ATLANTA, April 19, 2012 – More than half (55 percent) of companies participating in the Technology Executives Roundtable (TER) 2012 Atlanta Technology Executive Compensation Survey say company founders still have 50 percent or more equity ownership of the organizations they created.

“Founder equity ownership has been steadily increasing since 2009, when only 40 percent of company founders retained a majority stake of their organizations,” said Evan Rogoff, president of TER. “This increase may be a sign that valuations are improving and less dilution is occurring or that founders are finding creative alternatives to financing and growing their companies with less dilution. Either way, it is a big win for entrepreneurs.”

With the release of its third annual Atlanta Technology Executive Compensation Survey, TER, an association that consists of more than 100 Georgia-based CEOs, CFOs and general managers, is providing a unique service to its members and to the Georgia technology community at large. The study was underwritten by Arketi Group; ExecuLinks, Frazier & Deeter; Morris, Manning & Martin; Pritchard & Jerden; Silicon Valley Bank; and Wm. Leonard & Co.

The survey also found that overall, average base compensation among technology executive teams ranged from $218,500 for presidents to $134,306 for senior engineering (development) executives. The president and CEO positions commanded the highest average salaries in the executive suite, followed by COOs, CFOs and other executive team members. Within the executive suite, senior sales, marketing, business development and technology/development executives earned similar salaries (less than 20 percent variance).

Bonus Potential

With regard to bonus compensation, the study found target bonus potential for technology executives in 2011 ranged from an average high of $67,124 for CEOs to a low of $18,580 for senior marketing executives. Of this available 2011 bonus compensation, CEOs, senior sales executives and senior business development executives led the executive suite with $42,197, $33,397 and $30,428 of total bonus potential earned respectively.

Commission potential for sales executives averaged $99,253 at 100 percent of goal for sales executives and $60,909 of goal for business development executives.

Compensation Plans for 2012

For 2012, 60 percent of companies surveyed plan to increase base compensation. A careful analysis of individual company plans, however, reveals that 87 percent of those planning an increase will raise compensation 5 percent or less, while a mere 4.5 percent will raise compensation by 25 percent or more. Companies planning an increase changed little from 59 percent in 2011 to 60 percent in 2012, indicating increased company stability.

Executive Equity

In addition to base and bonus compensation, the survey provides information on equity ownership. For example, the study found significant differences in the fully diluted equity ownership (excluding founder’s stock) among CEOs and presidents, and other executives. On average, CEOs and presidents were granted 5.23 percent and 4.30 percent of fully diluted equity ownership. The remainder of the executive team holds equity as follows:

• Senior business development: 3.57 percent
• COO: 3.17 percent
• Senior engineering/development: 2.05 percent
• CTO: 1.86 percent
• CFO: 1.81 percent
• Senior sales: 1.00 percent  
• Senior marketing: 0.98 percent

Additional findings regarding stock options included:

• CEOs currently hold the largest percentage of the overall total stock option pool at 15.23 percent, followed by presidents (14.09 percent), COOs (11.63 percent) and CFOs (7.69 percent). Senior business development executives, senior sales executives and senior development directors, averaged between 5 and 6 percent of the overall option pool.
• Vesting periods ranged from one to five years, with a dominant 55 percent of respondents saying their vesting period was four years. After that, 25 percent of firms had a three-year vesting period, while 11 percent were at five years. Only 9 percent of firms had two years or less to vest stock options.

The survey is available exclusively to TER members and clients of TER survey sponsors. For more information on TER, visit www.ter-atlanta.com.

About the 2012 Atlanta Technology Executive Compensation Survey

The study was designed to identify executive compensation and company ownership among Atlanta technology companies during calendar year 2011. Overall, 75 public and privately-funded technology companies across a wide range of market segments, including software, hardware and services participated in the survey. Companies participating in the study were led by Software and SaaS Developers (59 percent), Technology Consulting and other professional service firms (17 percent), Internet Services (8 percent), Hardware Developers (4 percent) and others (12 percent). The majority of firms were privately funded (79 percent) with Angel funding the most common source (23 percent), in business longer than five years (71 percent) and had 2011 revenue in excess of $2 million (73 percent). Most companies had less than $25 million in revenue (85 percent), with 27 percent under $2 million and 37 percent with $2-10 million. Only seven companies (9 percent) had more than $50 million in revenue.