Software CEO Compensation 2016, Executive Summary

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The Softletter Compensation Survey

(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 thesBM53 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 50 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 BM53 needs 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 in 2014 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 regarding 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 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.

For this executive summary, we have included base compensation numbers by category, year and median. Compensation numbers for all 53 benchmark companies, as well as total compensation figures and medians, are available to Softletter subscribers.

Company Categories Software CEO Base Compensation 2013 (Median)  Software CEO Base Compensation 2013 (Median)
Big Four
SaaS Sales and Marketing $475,000   $450,000
SaaS B2B/C Verticals $325,000  $325,000
Social Networks $610,455 $653,165
Mobile B2B $475,000  $355,924
Mobile B2C  $363,000 $422,205
 On Premise  $800,000 $695,205

 

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