Huh? When you found a company you own all the stock. You dilute yourself with rounds of financing, but in the early days you are not on a vesting schedule. You own the stock. I think it is true that a company would pay much more for an outside CEO but the founder owns the company and has a much bigger equity stake than an outsider. It’s fair to say founders could be paid more but I never felt exploited and I preferred to use our limited cash to pay others who could help fulfill the mission.
the biggest consideration that i've seen CEOs maintain is they don't want to be paid 'market value' in cash because they prefer signaling to their team that it's about playing long game. Note to the haters, these folks aren't trying to underpay their team, just get folks comfortable that they're not going to overpay cash, etc.
the worst situations are when underpaying a CEO/founder leads to stress/distraction on their end. I never understand why investors don't want to solve this ASAP - we've suggested/approved one time bonuses, salary increases, secondary sales, whatever just to get the founder out of a bad housing situation, eliminate their student debt, help with a family medical cost, propose to a significant other, etc etc
I’d disagree - in the first four years while stock is vesting the ceo is overpaid - then when it is full vested they are underpaid. But the reality is that stock should vest until the exit occurs - say 10 years or longer. In that case if the company is valuable the zero basis stock vesting makes the founder ceo receive total comp much higher than a hired ceo who has higher strike price and smaller ownerhship. The world has changed and shorter vesting periods make no sense in our current environment. Further - there is a market - founder ceos can just quit - keep their stock and start a new company. If they are underpaid more of them would leave earlier. But they argue they must stay or someone else will devalue their stock which belies the point that they are underpaid as they are working to increase their stock value.
100% agree. Fight the same fight all the time!
go go go!!
I had an investor tell me I should get comfortable living on ramen because that’s how it’s done. Unfortunately, 30 year old me believed it.
Huh? When you found a company you own all the stock. You dilute yourself with rounds of financing, but in the early days you are not on a vesting schedule. You own the stock. I think it is true that a company would pay much more for an outside CEO but the founder owns the company and has a much bigger equity stake than an outsider. It’s fair to say founders could be paid more but I never felt exploited and I preferred to use our limited cash to pay others who could help fulfill the mission.
the biggest consideration that i've seen CEOs maintain is they don't want to be paid 'market value' in cash because they prefer signaling to their team that it's about playing long game. Note to the haters, these folks aren't trying to underpay their team, just get folks comfortable that they're not going to overpay cash, etc.
the worst situations are when underpaying a CEO/founder leads to stress/distraction on their end. I never understand why investors don't want to solve this ASAP - we've suggested/approved one time bonuses, salary increases, secondary sales, whatever just to get the founder out of a bad housing situation, eliminate their student debt, help with a family medical cost, propose to a significant other, etc etc
I’d disagree - in the first four years while stock is vesting the ceo is overpaid - then when it is full vested they are underpaid. But the reality is that stock should vest until the exit occurs - say 10 years or longer. In that case if the company is valuable the zero basis stock vesting makes the founder ceo receive total comp much higher than a hired ceo who has higher strike price and smaller ownerhship. The world has changed and shorter vesting periods make no sense in our current environment. Further - there is a market - founder ceos can just quit - keep their stock and start a new company. If they are underpaid more of them would leave earlier. But they argue they must stay or someone else will devalue their stock which belies the point that they are underpaid as they are working to increase their stock value.