Software CEO Compensation 2016 (Softletter subscriber-access only)

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Software CEO Compensation 2016 (Softletter subscriber-access only)

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(Please check our recent RPE and R&D metrics for a listing of the firms listed in the Software CEO Compensation Benchmark 53 report.)

For these BM53 reports, we do not break out compensation by base, bonuses, and various stock and options packages, simply base and combined (bonuses, special expenses such as travel, special incentives, etc.).  For more detailed breakdowns, our Top 53 Software CxO series due later this year, as well as our CxO compensation surveys, will provide that level of detail. Wide swings in variable compensation can lead to disparities in pay, but from year to year, compensation medians tend to be surprisingly stable. The most stable software CEO compensation group is On Premise; these markets are dominated by long-time winners whose business models are fairly stable with compensation numbers following suit.

In some cases, despite government reporting requirements, CEO compensation was not available in public filings. Anytime a company declines to list CEO compensation on a timely basis, you can assume a company is undergoing “interesting” times. Most of the companies not reporting CEO compensation are found in the Mobile B2B/C categories, no great surprise.

You will note that some CEOs report that they received  “$1” in base and even total compensation. These numbers have not been calculated into our means and averages. This pay gimmick was popularized by Steve Jobs when he resumed control of Apple in 1996 and at the time was widely lauded as proof of his commitment to the company. In truth, Jobs was handsomely compensated for his historic turnaround effort at Cupertino via bonuses and stock options and we believe the $1 base-pay claim has outlived its usefulness, functioning now as an unconvincing PR stunt that obfuscates salary analysis. Regardless of your opinion on the topic, you should ignore such figures and focus on the total compensation numbers.

When discussing executive compensation, the pay of certain executives in the Benchmark 53 need to be separated from the rest of the executives we report on. Take, as an example, Mark Zuckerberg. The co-founder of Facebook is currently worth approximately $47B, depending on the particular day and performance of the stock market. In 2013 Zuckerberg realized an “income” of $3.3B by exercising his stock options and $2.3B in2014 via a stock sale to cover tax bills generated by his options cash event. (While we provide these numbers, they and similar amounts are also excluded from the medians we generate in the report.)

Other senior executives in the industry, most famously Bill Gates, have also been associated with astronomic pay and compensation levels, but we believe at a certain point to regard these monies as a salary is misleading. A person generating this amount of money is physically incapable of ever consuming this type of cash in his or her lifetime (and even if they did, please remember that the type of consumption typically associated with the ultra-wealthy—yachts, luxury cars, fancy houses, corporate jets, expensive vacations, fine wines et al—tends to spin off good paying jobs for the craftsmen and workers who supply this largess).

Rather, these numbers reflect both a person’s and company’s power and influence in an industry. In the current political climate, it is rather funny to listen to politicians threaten to tax “the billionaires” to pay for new spending programs. There are currently 356 official billionaires in the U.S., with Mark Zuckerberg ranked in the top 10 of the richest Americans If the government were to seize all of his wealth, it would fund the current federal deficit for about two weeks.

Of interest is that as of 2017, new SEC rules mandate that public companies will be required to disclose the ratio of CEO compensation pay to median worker pay, providing a far clearer look into pay rations at larger companies (previously, companies have not had to disclose employee pay levels). However, these new requirements do not require that compensation for other officers who have fiduciary responsibility at a company (usually at least the CFO, CTO) report their compensation ratios under these transparency policies.

The Softletter Benchmark 53 CEO Compensation Report

Big Four Name Base Salary 2014 Total Compensation 2014 Base Salary 2013 Total Compensation 2013
Microsoft Satya Nadella $918,917 $84,308,755 $669,167 $7,668,952
Google Larry Page $1 $1 $1 $1
Apple Tim Cook $1,748,462 $9,222,638 $1,400,006 $4,252,727
Oracle Lawrence J. Ellison $1 $67,261,251 $1 $79,606,159
SaaS Sales and Marketing
Constant Contact Gail F. Goodman $475,000 $4,719,262 $450,000 $2,719,929
Cvent Reggie K. Aggarwal $403,302 $4,356,097 $384,097 $485,968
HubSpot Brian Halligan $259,560 $802,928 $238,183 $371,771
LivePerson Robert P. LoCascio $511,538 $1,470,718 $500,271 $1,252,019
Marketo Phillip M. Fernandez $400,000 $7,612,972 $350,000 $2,457,900
Netsuite Zachary Nelson $500,000 $31,640,991 $500,000 $12,483,428
Salesforce Marc Benioff $1,200,000 $31,333,332 $1,000,000 $22,100,904
Median $475,000 $4,719,262 $450,000 $2,457,900
SaaS Enterprise
Workday Aneel Bhusri $33,280 $9,768,097 $33,280 $12,835,420
Zendesk Mikkel Svane $285,385 $14,363,240 $200,000 $274,906
Veeva Peter P. Gassner $270,833 $8,183,575 $225,000 $225,000
Demandware Thomas D. Ebling $325,000 $3,036,640 $325,000 $2,441,980
ServiceNow Frank Slootman $425,000 $10,858,116 $350,000 $7,387,064
Benefit Focus Shawn A. Jenkins $561,723 $2,798,086 $536,038 $924,278
LogMeIn Michael K. Simon $400,000 $4,478,960 $371,000 $5,138,234
Median $325,000 $8,183,575 $325,000 $2,441,980
SaaS B2C Verticals
Angie’s List William S. Oesterle $459,324 $2,953,218 $418,881 $2,907,084
Wix Avishai Abrahami * $259,000 $341,000 NA NA
Pandora Brian McAndrews $500,000 $980,448 $153,425 $29,167,388
Blackbaud Michael P. Gianoni ^ $581,923 $4,789,474 NA NA
Blackbaud Marc E. Chardon (Former) ~ NA NA $408,933 $875,966
Qualsys Philippe F. Courtot $350,000 $5,816,137 $350,000 $444,063
Realpage Stephen T. Winn $500,000 $3,492,780 $495,833 $3,181,794
Callidus Leslie J. Stretch $450,000 $3,920,299 $450,000 $1,423,412
Median $475,000 $3,706,540 $408,933 $1,423,412
Mobile B2B
Millenia Media Michael Barrett # $467,014 $9,533,591 NA NA
Millenia Media Paul Palmieri (Former) NA NA $343,688 $4,551,489
Medl Andrew Maltin $223,230 $339,406 $200,000 $200,000
Glu Mobile Niccolo M. de Masi $434,539 $7,667,789 $357,479 $1,676,889
Turbine Peter Adderton (Former) $475,000 $2,324,155 $465,847 $575,556
Perion Josef Mandelbaum $607,000 $2,370,000 NA NA
Intellicheck Nelson Ludlow (Former) $194,750 $366,833 $246,000 $246,000
NQ Mobile Henry Yu Lin/Omar Sharif Khan NA NA NA NA
Median $475,000 $2,324,155 $355,924 $410,778
Mobile B2C
King Digital Riccardo Zacconi
Fitbit James Park $222,179 $7,844,625 NA NA
Electronic Arts Andrew Wilson $674,038 $13,975,381 $510,865 $5,631,976
Zynga Don A. Mattrick $1,000,000 $8,231,912 $481,409 $57,814,391
Zynga Mark Pincus (Former) $33,173 $33,308 $75,000 $75,236
Majesco Jesse Sutton $363,000 $376,859 $363,000 $1,010,259
Yelp Jeremy Stoppelman $1 $66,913 $37,501 $8,097,964
Renren Joseph Chen NA NA NA NA
Median $363,000 $4,110,742 $422,205 $3,321,118
Social Networking
LinkedIn Jeffrey Weiner $825,000 $15,637,153 $583,750 $49,071,363
Facebook Mark Zuckerberg $1 $610,455 $1 $653,165
Twitter Richard Costolo $13,892 $175,399 $130,250 $130,250
Groupan Eric Lefkofsky $0 $0 $0 $7,109,996
MeetMe Geoffrey Cook $298,500 $1,239,087 $250,000 $579,199
Mediabistro Alan M. Meckler $243,242 $369,415 $292,833 $361,899
Sina Charles Chao NA NA NA NA
Median $243,242 $610,455 $271,417 $616,182
On Premise
Microfocus Kevin Loosemore $695,205 $17,691,288 $695,205 $1,304,000
Autodesk Carl Bass $1,027,654 $8,297,290 $991,000 $9,406,409
Red Hat James M. Whitehurst $800,000 $6,692,552 $789,583 $7,195,993
Progress Philip M. Pead $650,000 $3,290,896 $637,885 $14,239,235
Symantec Stephen M. Bennett (Former) $1,004,312 $13,099,779 $684,028 $12,996,588
Nuance Paul A. Ricci $800,000 $17,939,756 $800,000 $29,226,829
Ansys James E. Cashman III $670,000 $5,292,269 $610,000 $3,065,663
Median $800,000 $8,297,290 $695,205 $9,406,409

CEO Benchmark 53 Analysis

A few quick notes. Sharp spikes in Total Compensation numbers usually reflect a stock or options event and are typically indicative of a company hitting performance, growth, and revenue goals. Base compensation typically serves as a good indicator of how a smaller company, or one ramping towards growth, judges itself when at the starting gate. Rely on Total Compensation as an indicator of how stockholders and the company’s board of directors are rating CEO performance. Based on this indicator, many people are happy with Marc Benioff (Salesforce), Zach Nelson (Netsuite), and Paul Ricci (Nuance, the last company standing in commercial speech recognition).

Numbers which stand well outside the medians (Richard Costolo) are normally indicators of tumult and serious market challenges, as anyone who follows Twitter’s attempts to avoid becoming Facebook, while explaining the rationale for maintaining a social network built around 1990’s technical limitations (140 characters for an SMS), can attest to.


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