The Great Resignation has rippled across headlines and boardrooms as employees’ values and priorities evolve. Has the Great Resignation been caused by a silent stagnation in compensation?
Let’s compare data from 2010 and 2021 to understand the longitudinal trends in cash and equity compensation. The cash compensation of three executive roles at early-stage companies has increased faster than inflation.
Role
2010 Cash
2021 Cash
Cash Change
VPE
219
256
33%
VPM
220
250
34%
VPS
320
404
26%
CPI
217
262
21%
A VP of Engineering in a Bay Area startup that has raised less than twenty-five million dollars earned 33% more in 2021 than 2010. In constant dollars (correcting for inflation, which is listed here as CPI), a 2021 VPE took home 12% more. A nice bump. VPs of Marketing saw similar raises across their salary and bonus. Heads of sales’ pay appreciated 5 percentage points more than inflation.
Role
2010 Equity
2021 Equity
Equity Change
VPE
1.6%
2.0%
33%
VPM
1.2%
1.1%
-8%
VPS
1.5%
1.4%
-7%
Equity value surged. We’ll use two tables to tell the story here.
VPs of engineering today command 33% more than their 2010 younger selves. Equity grants for VPSs and VPMs are down on an ownership basis by about 7-8%. But remember the equity value is the ownership multiplied by the valuation. During the intravening decennium, startup valuation have compounded at 24% annually.
Year
Series A Post-Money Valuation, $m
Value of 1% Equity, $m
2010
12.5
0.125
2021
105
1.05
Owning 1.4% of a company worth $105m, an executive is 7.4x better off than ten years ago. I’m ignoring the cost of exercising options and the 409a price to simplify the math. Assuming the 409a methods haven’t changed in this period, the increase in take-home pay multiple would be constant, but the amount is reduced by the cost of option exercise.
Overall, executives earn considerably more than eleven years ago, driven primarily by equity value. Cash has also outpaced inflation. The question I haven’t answered is whether compensation at larger companies has materially outpaced startups’ raises. But if you’re a startup person, the data suggests you’re better paid than ten years ago.
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