HomeVenture CapitalIs Compensation Stagnation to Blame for the Nice Resignation? by @ttunguz

Is Compensation Stagnation to Blame for the Nice Resignation? by @ttunguz

The Nice Resignation has rippled throughout headlines and boardrooms as workers’ values and priorities evolve. Has the Nice Resignation been attributable to a silent stagnation in compensation?

Let’s evaluate knowledge from 2010 and 2021 to know the longitudinal traits in money and fairness compensation. The money compensation of three govt roles at early-stage firms has elevated quicker than inflation.

Position 2010 Money 2021 Money Money Change
VPE 219 256 17%
VPM 220 250 14%
VPS 320 404 26%
CPI 217 262 21%

A VP of Engineering in a Bay Space startup that has raised lower than twenty-five million {dollars} earned 17% extra in 2021 than 2010. In fixed {dollars} (correcting for inflation, which is listed right here as CPI), a 2021 VPE took residence 4% much less. VPs of Advertising and marketing noticed comparable raises throughout their wage and bonus, and small loss to inflation. However, heads of gross sales’ pay appreciated 5 share factors greater than inflation.

Position 2010 Fairness 2021 Fairness Fairness Change
VPE 1.6% 2.0% 33%
VPM 1.2% 1.1% -8%
VPS 1.5% 1.4% -7%

Fairness worth surged. We’ll use two tables to inform the story right here.

VPs of engineering at present command 33% greater than their 2010 youthful selves. Fairness grants for VPSs and VPMs are down on an possession foundation by about 7-8%. However bear in mind the fairness worth is the possession multiplied by the valuation. Through the intravening decennium, startup valuation have compounded at 24% yearly.

12 months Sequence A Submit-Cash Valuation, $m Worth of 1% Fairness, $m
2010 12.5 0.125
2021 105 1.05

Proudly owning 1.4% of an organization value $105m, an govt is 7.4x higher off than ten years in the past. I’m ignoring the price of exercising choices and the 409a value to simplify the maths. Assuming the 409a strategies haven’t modified on this interval, the rise in take-home pay a number of could be fixed, however the quantity is diminished by the price of possibility train.

General, executives earn significantly greater than eleven years in the past, pushed primarily by fairness worth. Money hasn’t outpaced inflation. The query I haven’t answered is whether or not compensation at bigger firms has materially outpaced startups’ raises. However should you’re a startup individual, the information suggests you’re higher paid than ten years in the past in fairness.



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