VentureMade Transparent: Management Equity Compensation Benchmarks - 13 July 2009
http://www.markpeterdavis.com/getventure/2009/07/management-equity-compensation-benchmarks.html
Management Equity Compensation Benchmarks
I'm
often asked by entrepreneurs for equity compensation benchmarks. They
want to know how much equity they should give a COO, a VP or a CEO.
Understanding these numbers is important for sizing an option pool and important for creating compensation plans for new members of the team.
Wilson Sonsini Goodrich & Rosati,
a venture law firm, recently published the results of a study on the
typical equity compensation packages for key managers after a Series A
investment. These numbers provide pretty useful guidance not only for
compensation at the time of the Series A, but also for compensation at
the Seed or Series B round as these metrics can be adjusted for likely
dilution to back into a benchmark for equity at the Seed stage or
otherwise.
It is worth noting that these numbers are not the
end-all be-all for equity compensation. They might fluctuate as market
dynamics change and may not be representative of the entire market.
That said, they should provide entrepreneurs with some directional
guidance.
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Dan, this is a very helpful post for those of us in the start-up world. Thanks, Rob