Press Release - September 13, 2007
Lafayette, CA — September 13, 2007 — Syzygy Consulting Group’s 2007 Pre-IPO and Private Company Total Compensation Survey reports that private companies continue to attract key technical and executive talent from their larger public company rivals. “We were astonished by the sharp increase in compensation this year,” reports David Broman, Syzygy’s CEO.
“It’s common knowledge that high profile public companies like Google and VMware pay big bucks, but we see private companies — hungry for talent — shell out $160,000 for a top developer plus a big chunk of pre-IPO stock,” Broman said. “A CEO of a public company must tell a pretty good story to keep their best talent from jumping ship for the potential huge rewards of a start-up,” he added.
Syzygy’s annual compensation survey is the “go-to” source for private company pay practices. The 2007 results were released September 12th, following four months of extensive labor market research.
This comprehensive survey reflects the pay practices of nearly 15,000 employees at over 220 companies. The key findings include:
- Aggregate employee ownership increased 10 percent, jumping from 15.13 to 16.64 percent of a company’s total shares outstanding.
- Stock options remained the dominant means of providing employees with equity, however, use of performance-based stock option grants doubled, now provided by 48 percent of the companies surveyed.
- Restricted stock, which is outright grants of stock to employees, saw a slight increase in prevalence, from 24 to 26 percent.
- CEO and executive pay increased too. The typical executive team now holds more than eight percent of the company, which is a powerful incentive for top performers.
- The software industry showed the largest increase. Overall employee ownership jumped 20 percent in 2007. Annual cash compensation showed a nearly identical leap.
- Comprehensive healthcare benefits packages are also commonplace, and 90 percent of the companies are contributing to employee tax deferred retirement plans.
Syzygy’s survey began in 1999, and now reflects over eight years of data on private company pay practices. Only participating companies receive the confidential results, and participants are usually clients of Syzygy or preferred private company clients of Silicon Valley’s leading law firms including Cooley Godward, DLA Piper, Fenwick & West, Gibson Dunn, Morrison & Foerster, Pillsbury Winthrop, and Simpson Thacher.
Brian Andriuzzo, Syzygy’s CFO, commented on some other enlightening aspects of this year’s results. “Private companies are changing the compensation practices for their Board of Directors,” observed Andriuzzo. “The number of private companies providing cash compensation to Board members doubled in 2007, and we found a pretty dramatic increase in the use of annual stock grants.” Andriuzzo also pointed out the direct correlation of this phenomenon to the continuing change in the typical Board’s composition. “Independent directors now comprise the majority of most Boards. The era of founders, attorneys and investors dominating Board membership may have seen its day.”
Broman agreed, adding “private technology companies are capturing qualified, independent Board talent by offering aggressive compensation opportunities. These companies are more willing to pay top dollar for the best advice and guidance needed to succeed.”
For more details about the 2007 survey results, contact a Syzygy compensation consultant at 925-284-3669 or visit www.syzygyconsulting.com.
About Syzygy Consulting Group LLC
Syzygy Consulting Group LLC, established experts in compensation practices, serves clients ranging from the largest multinational corporations to small private companies. Founded in 1995, Syzygy’s customized consulting services help clients define and implement compensation programs to retain key talent, link compensation to performance and improve the effectiveness of overall compensation programs. Syzygy is a registered trademark of Syzygy Consulting Group LLC.
Contact: Brandon Butler
925-284-3669
925-284-0858 Fax
info@syzgyconsulting.com
http://www.syzygyconsulting.com
