Parksquare - 2013 Compensation & Entrepreneurship Report in Life Sciences & Healthcare - November 2013

Visit www.compstudy.com and register to receive full access

A SERVICE FROMPARK SQUARE

EXECUTIVE SEARCH

Sponsored By:

life sciences & healthcare 2013

www.compstudy.com© Copyright 1999-2013, Park Square Executive Search LLC. All Rights Reserved

Special Access Code

cs2013LS

Abbreviated Edition

2013 Compensation & Entrepreneurship Report in Life Sciences & Healthcare2013 Compensation & Entrepreneurship Report in Life Sciences & Healthcare

www.compstudy.com | www.parksquare.comwww.compstudy.com | www.parksquare.com# #

Letter to the Industry

On behalf of Park Square Executive Search, EY, WilmerHale, and Professor Noam

Wasserman of Harvard Business School, I’d like to welcome to the 2013 edition of our

annual Compensation and Entrepreneurship Report in Life Sciences & Healthcare.

This report—our fourteenth annual and largest to date—includes summaries and

analysis of compensation data collected from executives at more than 250 private

companies from across the country in therapeutics, devices, tools/instrumentation,

and other industries. The survey data for this edition were collected between May

and August of 2013.

This survey responds to our clients’ continuing need for better access to reliable,

comparable compensation data to assist them in the critical decisions involved in

attracting, motivating and retaining key executives at private companies.

We are able to present correlations between executive compensation and a number

of variables, including: financing stage, company size both in terms of product stage

and headcount, founder/non-founder status, industry segment and geography. We

also provide a number of analytics on Board of Directors compensation and make-

up, company equity plans, and a look at how organizations develop as they raise

additional financing.

This summary document provides only high level excerpts from the detailed analysis

available on-line at www.compstudy.com. Complete access to the data is available

free of charge to survey participants and is also available as a paid subscription.

Thanks for reading,

Erik Lundh

Managing Partner

Park Square Executive Search

7

Founder Compensation and Sponsor Information

17 16.3

USD 1,000’s

$0

$50

$100

$150

$200

$250

$300

$350

240.6

182.8191.3

206.6

34.5

260

164.7 164.7

192.8174.6 180.8

18.5

152.3 148.7

47.8

64.826.3

30.8

199.5

51.936.9

19.5

35.326

72

257.5

28

205.4

83.8

29.6

19

2419.3

63.4

57

34.9

87.5

248.4

2012 Base Salary 2012 Bonus Received 2012 Unachieved Bonus 2013 Base Salary 2013 Target Bonus

CEO Head ofFinance/CFO

Head ofBus Dev/CBO

Head ofClinical Research

Head ofRegulatory Affairs

Research &Develop/CSC

Head ofPlatform Tech/CTO

Head ofEngineering

9.36

Founder Total Cash

• Founder CEO salaries were up slightly less than their non-founder peers: 0.9% vs 1.42%.

Founder Equity Holdings

• On the average, founders of life sciences companies hold significantly less equity than their technology peers – largely due to the more capital-intensive nature of most life sciences start-ups.

Founder Cash Compensation

Sponsor Information

Park Square Executive Search is a retainer-based executive search firm located in Cambridge, Massachusetts and in Menlo Park, California. Park Square serves clients and institutions that are changing the world through discovery, innovation, and growth.

www.parksquare.com

EY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities.

www.ey.com

WilmerHale offers unparalleled legal representation across a comprehensive range of practice areas that are critical to the success of our clients. We practice at the very top of the legal profession and offer a cutting-edge blend of capabilities that enables us to handle deals and cases of any size and complexity.

www.wilmerhale.com

TABLE OF CONTENTS

Demographics 3

Cash Compensation 4

Equity and Severance 5

CEO Compensation by Headcount 6

Founder Compensation and Sponsor Information 7


www.compstudy.com | www.parksquare.comwww.compstudy.com | www.parksquare.com# #36

Geography Financing Rounds Raised

Business Segment Headcount by Number of Full-Time Employees

27.7

9.4

9.8

12.5

14.1

26.6

% respondents in this range

California

New England

Mid Atlantic

Midwest

West

South

11.7

6.1

39.6

42.6


Therapeutics

Other

Tools/Instrumentation

Devices

0

10

20

30

40

50

60

70

80

44.9

14.4 2218.8


1–20 21–40 41–75 76+

0

5

10

15

20

25

30

8.3

20.517.3 14.2 14.6

25.2


0 1 2 3 4 5 or more

The geographic distribution in 2013 closely mirrors venture capital funding trends, and the universe of private companies at large.

The companies in this year’s survey are at roughly the same stage as in last year’s survey, when measured by the number of financing rounds raised.

Medical device companies made up a proportionally larger amount of this year’s sample, up to 40% from 35% last year.

Respondent company headcounts were distributed similarly to those in the 2012 survey, with a slightly higher percentage of large companies this year.

Demographics

This survey of executive compensation in privately held life sciences and healthcare companies was conducted between May and August of 2013. The questionnaire resulted in over 250 companies participating with data from over 2,000 executives in a wide cross section of industry sectors, geographies and stages of development.

0%

1%

2%

3%

4%

5%

6%

7%

% F

ully

Dilu

ted

Sha

res

50th25th Mean 75th

3.71–20 FTEs 4.3 4.9 6

3.921–40 FTEs 4.8 4.6 5.4

2.841+ FTEs 4.5 4.2 5

$0$50

$100$150$200$250$300$350$400$450

1,00

0’s

US

D

50th25th Mean 75th

2301–20 FTEs 300 280.6 338

30021–40 FTEs 353 333 382

27541+ FTEs 330 330 375

CEO Compensation by Headcount

Equity: By Number of Full-time Employees

Base Salary: By Number of Full-time Employees

Slice this data yourself at www.compstudy.com

When controlling for other variables, headcount has proven to be the best predictor of non-founder cash compensation. Equity holdings tend to be most strongly correlated with the number of financing rounds a company has raised.

Screenshot of online reporting tool



Cash Compensation

22.3

11.6 11.8

21

USD 1,000’s

$0

$100

$200

$300

$400

$500

303

191 198 203 207 220232

173 179231 235 235

195 201172 183 189 193

181 184

44366045

3237

4502324

244

73556342

20

4937

644765

29

34

3422 54

87

34

124


Head ofBus Dev/CBO

Head ofClin Research

Head ofReg Affairs


COO Head ofPlatform Tech/CTO

Head ofEng

Head ofMarketing

Head ofMFG/Ops

306

512

9


1616

This data compares 2013 compensation data with compensation data for 2012 non-founding executives. 2012 figures are represented with both actual bonus received and total unachieved target bonus for the year. 2013 bonus figures indicate at-plan target amounts. More granular analysis can be found online at www.compstudy.com.

• Non-founder total target cash compensation was up 3% in 2013, down slightly the 3.5% rate of increase between 2011 and 2012.

• On average in 2012, non-founder executives received 67.8% of their target bonuses, up slightly from 65.5% in 2011.

17

11.6

% of base salary

0%

5%

10%

15%

20%

25%

30%

35%

40%

27

16.8

25.4

13.6

28.7

19.422.8

19.8

26.7

8.4

17.5

22.5

11.9

23

18.520.2

22.8

31.4

18.422.5

4.4

6.2

2.512.1

28.3

6.4

23.3

2.96.415.810.9

10.5

46.3

2012 Bonus Received 2012 Unachieved Bonus 2013 Target Bonus


Head ofBus Dev/CBO


Head ofReg Affairs



Head ofEng

Head ofMarketing

Head ofMFG/Ops

Total Cash Compensation: Non-Founders

Bonus as a Percentage of Base Salary

Equity and Severance

17

% equity owned, fully diluted

0

1

2

3

4

5

0.9 0.9 1 10.8

0.50.7

11.3

2 2.2

1.2

1.9

0.711

4.54.6

2013 Median 2013 Mean

0.9 1.1

0.50.8


Head ofBus Dev/CBO


Head ofReg Affairs



Head ofEng

Head ofMarketing

Head ofMFG/Ops

The CompStudy survey also contains detailed questions around non-cash executive compensation and benefits. The 2013 online reports show base, bonus, equity at hire, current equity, and severance for each executive role. More granular analysis can be found online at www.compstudy.com.

• These equity figures are averages covering companies across the maturity and fundraising spectrum.

• As the chart below illustrates, only CEOs consistently received any severance package.

• Earlier-stage non-founder executives do tend to have more equity, but dilution effects tend to level off after the second round of financing has been raised.

• Nearly all severance packages are granted in three-month increments. The median length of severance for CEOs is six months. For all other positions it is three months.

17

% eligible for severance

0

10

20

30

40

50

60

70

80

44.2 41

25.6

45.3 48.9

34.628.9

33.3 30.439.7

67.3


Head ofBus Dev/CBO


Head ofReg Affairs



Head ofEng

Head ofMarketing

Head ofMFG/Ops

Equity Holdings

Severance Eligibility



Cash Compensation

22.3

11.6 11.8

21

USD 1,000’s

$0

$100

$200

$300

$400

$500

303

191 198 203 207 220232

173 179231 235 235

195 201172 183 189 193

181 184

44366045

3237

4502324

244

73556342

20

4937

644765

29

34

3422 54

87

34

124


Head ofBus Dev/CBO


Head ofReg Affairs



Head ofEng

Head ofMarketing

Head ofMFG/Ops

306

512

9


1616

This data compares 2013 compensation data with compensation data for 2012 non-founding executives. 2012 figures are represented with both actual bonus received and total unachieved target bonus for the year. 2013 bonus figures indicate at-plan target amounts. More granular analysis can be found online at www.compstudy.com.

• Non-founder total target cash compensation was up 3% in 2013, down slightly the 3.5% rate of increase between 2011 and 2012.

• On average in 2012, non-founder executives received 67.8% of their target bonuses, up slightly from 65.5% in 2011.

17

11.6

% of base salary

0%

5%

10%

15%

20%

25%

30%

35%

40%

27

16.8

25.4

13.6

28.7

19.422.8

19.8

26.7

8.4

17.5

22.5

11.9

23

18.520.2

22.8

31.4

18.422.5

4.4

6.2

2.512.1

28.3

6.4

23.3

2.96.415.810.9

10.5

46.3

2012 Bonus Received 2012 Unachieved Bonus 2013 Target Bonus


Head ofBus Dev/CBO


Head ofReg Affairs



Head ofEng

Head ofMarketing

Head ofMFG/Ops

Total Cash Compensation: Non-Founders

Bonus as a Percentage of Base Salary

Equity and Severance

17

% equity owned, fully diluted

0

1

2

3

4

5

0.9 0.9 1 10.8

0.50.7

11.3

2 2.2

1.2

1.9

0.711

4.54.6

2013 Median 2013 Mean

0.9 1.1

0.50.8


Head ofBus Dev/CBO


Head ofReg Affairs



Head ofEng

Head ofMarketing

Head ofMFG/Ops

The CompStudy survey also contains detailed questions around non-cash executive compensation and benefits. The 2013 online reports show base, bonus, equity at hire, current equity, and severance for each executive role. More granular analysis can be found online at www.compstudy.com.

• These equity figures are averages covering companies across the maturity and fundraising spectrum.

• As the chart below illustrates, only CEOs consistently received any severance package.

• Earlier-stage non-founder executives do tend to have more equity, but dilution effects tend to level off after the second round of financing has been raised.

• Nearly all severance packages are granted in three-month increments. The median length of severance for CEOs is six months. For all other positions it is three months.

17

% eligible for severance

0

10

20

30

40

50

60

70

80

44.2 41

25.6

45.3 48.9

34.628.9

33.3 30.439.7

67.3


Head ofBus Dev/CBO


Head ofReg Affairs



Head ofEng

Head ofMarketing

Head ofMFG/Ops

Equity Holdings

Severance Eligibility



Geography Financing Rounds Raised

Business Segment Headcount by Number of Full-Time Employees

27.7

9.4

9.8

12.5

14.1

26.6


California

New England

Mid Atlantic

Midwest

West

South

11.7

6.1

39.6

42.6


Therapeutics

Other

Tools/Instrumentation

Devices

0

10

20

30

40

50

60

70

80

44.9

14.4 2218.8


1–20 21–40 41–75 76+

0

5

10

15

20

25

30

8.3

20.517.3 14.2 14.6

25.2


0 1 2 3 4 5 or more

The geographic distribution in 2013 closely mirrors venture capital funding trends, and the universe of private companies at large.

The companies in this year’s survey are at roughly the same stage as in last year’s survey, when measured by the number of financing rounds raised.

Medical device companies made up a proportionally larger amount of this year’s sample, up to 40% from 35% last year.

Respondent company headcounts were distributed similarly to those in the 2012 survey, with a slightly higher percentage of large companies this year.

Demographics

This survey of executive compensation in privately held life sciences and healthcare companies was conducted between May and August of 2013. The questionnaire resulted in over 250 companies participating with data from over 2,000 executives in a wide cross section of industry sectors, geographies and stages of development.

0%

1%

2%

3%

4%

5%

6%

7%

% F

ully

Dilu

ted

Sha

res

50th25th Mean 75th

3.71–20 FTEs 4.3 4.9 6

3.921–40 FTEs 4.8 4.6 5.4

2.841+ FTEs 4.5 4.2 5

$0$50

$100$150$200$250$300$350$400$450

1,00

0’s

US

D

50th25th Mean 75th

2301–20 FTEs 300 280.6 338

30021–40 FTEs 353 333 382

27541+ FTEs 330 330 375

CEO Compensation by Headcount

Equity: By Number of Full-time Employees

Base Salary: By Number of Full-time Employees

Slice this data yourself at www.compstudy.com

When controlling for other variables, headcount has proven to be the best predictor of non-founder cash compensation. Equity holdings tend to be most strongly correlated with the number of financing rounds a company has raised.

Screenshot of online reporting tool


www.compstudy.com | www.parksquare.comwww.compstudy.com | www.parksquare.com# #

Letter to the Industry

On behalf of Park Square Executive Search, EY, WilmerHale, and Professor Noam

Wasserman of Harvard Business School, I’d like to welcome to the 2013 edition of our

annual Compensation and Entrepreneurship Report in Life Sciences & Healthcare.

This report—our fourteenth annual and largest to date—includes summaries and

analysis of compensation data collected from executives at more than 250 private

companies from across the country in therapeutics, devices, tools/instrumentation,

and other industries. The survey data for this edition were collected between May

and August of 2013.

This survey responds to our clients’ continuing need for better access to reliable,

comparable compensation data to assist them in the critical decisions involved in

attracting, motivating and retaining key executives at private companies.

We are able to present correlations between executive compensation and a number

of variables, including: financing stage, company size both in terms of product stage

and headcount, founder/non-founder status, industry segment and geography. We

also provide a number of analytics on Board of Directors compensation and make-

up, company equity plans, and a look at how organizations develop as they raise

additional financing.

This summary document provides only high level excerpts from the detailed analysis

available on-line at www.compstudy.com. Complete access to the data is available

free of charge to survey participants and is also available as a paid subscription.

Thanks for reading,

Erik Lundh

Managing Partner

Park Square Executive Search

7

Founder Compensation and Sponsor Information

17 16.3

USD 1,000’s

$0

$50

$100

$150

$200

$250

$300

$350

240.6

182.8191.3

206.6

34.5

260

164.7 164.7

192.8174.6 180.8

18.5

152.3 148.7

47.8

64.826.3

30.8

199.5

51.936.9

19.5

35.326

72

257.5

28

205.4

83.8

29.6

19

2419.3

63.4

57

34.9

87.5

248.4



Head ofBus Dev/CBO

Head ofClinical Research

Head ofRegulatory Affairs


Head ofPlatform Tech/CTO

Head ofEngineering

9.36

Founder Total Cash

• Founder CEO salaries were up slightly less than their non-founder peers: 0.9% vs 1.42%.

Founder Equity Holdings

• On the average, founders of life sciences companies hold significantly less equity than their technology peers – largely due to the more capital-intensive nature of most life sciences start-ups.

Founder Cash Compensation

Sponsor Information

Park Square Executive Search is a retainer-based executive search firm located in Cambridge, Massachusetts and in Menlo Park, California. Park Square serves clients and institutions that are changing the world through discovery, innovation, and growth.

www.parksquare.com

EY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities.

www.ey.com

WilmerHale offers unparalleled legal representation across a comprehensive range of practice areas that are critical to the success of our clients. We practice at the very top of the legal profession and offer a cutting-edge blend of capabilities that enables us to handle deals and cases of any size and complexity.

www.wilmerhale.com

TABLE OF CONTENTS

Demographics 3

Cash Compensation 4

Equity and Severance 5

CEO Compensation by Headcount 6

Founder Compensation and Sponsor Information 7

Visit www.compstudy.com and register to receive full access

A SERVICE FROMPARK SQUARE

EXECUTIVE SEARCH

Sponsored By:

life sciences & healthcare 2013

www.compstudy.com© Copyright 1999-2013, Park Square Executive Search LLC. All Rights Reserved

Special Access Code

cs2013LS

Abbreviated Edition

Parksquare - 2013 Compensation & Entrepreneurship Report in Life Sciences & Healthcare - November 2013

Business

annual compensation

private6founder compensation

analysis of compensation

comparable compensation

life sciences startups

severance ceo compensation

s usdceo compensation

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