Analysis: median CEO pay of US tech startups that went public in 2020 was $21.9M; seven of the 10 best-paid CEOs of US public companies were from such startups
Wall Street JournalEliot Brown
Context & Ripple Effects
The 2020 IPO class is now topping the pay charts: a WSJ analysis finds the median CEO pay of US tech startups that went public in 2020 was $21.9M, and seven of the 10 best-paid CEOs at US public companies came from that single class. That lands on a cohort whose business record is already contested — the [[a:948889|unicorn IPO wave of the 2010s, with 13 offerings in 2019 alone, produced very mixed success once public]].
The pay finding also sits against a capital-efficiency debate: Founder Collective's analysis of 166 tech IPOs found the 30 most valuable startups raised half as much capital yet produced nearly 4X the value of the 30 most funded, while founder-led tech companies doubled their share prices in 2020 against a 7.8% S&P 500 gain. Big IPO-year grants are being written against a class whose post-IPO returns have not been uniform.
First-order effects
First-time public CEOs of the 2020 class are now the benchmark setters: boards at newly public tech companies are granting equity packages large enough that seven of the 10 highest-paid US public-company CEOs come from one IPO cohort.
Second-order effects
Compensation committees at future IPO candidates will benchmark against the $21.9M median, ratcheting up IPO-year grants, while proxy advisers and institutional investors face a widening gap between CEO pay and the mixed post-IPO performance the unicorn class has delivered.
Third-order effects
If IPO-timed mega-grants keep setting the pay ceiling while [[a:1166182|engineer base salaries at VC-backed startups rise 25% since 2022 but total compensation only 18%]], the equity split between founders, employees, and late-stage investors becomes a structural governance issue for the next IPO wave.
The trend: CEO compensation at newly public tech companies is being set by IPO-timed equity grants, decoupling founder pay from the uneven post-IPO returns this unicorn class has actually delivered.
@RMac18 Founder-CEOs have superpowers that allow them to do courageous things. Mark has done that time and again— turning down YHOO, instituting Ad Transparency, betting on VR etc etc. But the trust deficit is real and the FB Family may now better prosper under distributed leader…
“It starts to catch on like wildfire.” Many big tech founders took little or no remuneration as CEOs. Now, some of today's startup CEOs are among America's best-compensated corporate chiefs. https://www.wsj.com/...
Remember when startup CEOs didn't want to go public?? extra scrutiny, etc etc. The reticence worked! Now they get additional hundreds of millions of $$$ in stock grants to do so. @eliotwb has a ~~long read~~ on those fat pay packages at VC-backed firms. It's all the rage. https:/…
CEOs of startups are now the best paid CEOs in America -4 startup CEOs since 2020 have been given pay packages more valuable than that of the CEO of Alphabet ($280 M) -5 startup founders were paid better than every CEO in the S&P 500 https://www.wsj.com/...
investors: if you don't like the CEOs comp, and/or the companies performance, don't buy the stock! It's really that simple... you get what you pay for. CEO know that if they overpay themselves and the stock doesn't perform that a) investors run for the hills & b) you get fired ht…
“Archer Aviation...is years from producing its only planned product, a 4-passenger electric air taxi that the main US regulator hasn't yet certified... Still, the co-founders of this three-year-old company got...a $99 million special stock award” https://www.wsj.com/... @eliotwb
Archer Aviation is years from producing its eVTOL air taxi. It hasn't generated any revenue. Still, the co-founders got a huge payday last month, a $99 million special stock award that stands to quadruple if Archer hits other milestones https://www.wsj.com/... @eliotwb