Darwin HansonProf Compensation CS w passion for solid software!
Bio

I have helped both the very large and the new startup companies understand, develop, implement and maintain a compensation plan and philosophy that keeps payroll within budget as well as attracts and retains the highest quality workforce. My typical client uses both internal and external analysis to determine the appropriate strategical path. I also help them understand at what growth-point a spreadsheet is no longer the clear path to effectiveness and efficiency.



Recent Answers


As you may suspect, there really isn't a hard and fast answer. You can review averages to see that a CEO typically becomes a major shareholder in a startup, but your role and renumeration will be based on the perceived value you bring to the organization. You value someone's contribution through equity when you think that they will be able to add long-term benefits, you would prefer that they don't move company part way through the process, and to keep them from being enticed by a better salary (a reason for equity tied to a vesting arrangement). Another reason is when the company doesn't have salary money available but the potential is very strong. In this situation you should be especially diligent in your analysis because you will realize that even the best laid plans sometimes fall completely short. So to get the best mix, you have to be very real about the company's long-term growth potential, your role in achieving it, and the current liquidity necessary to run the operations. It should also be realized that equity needs to be distributed. You cannot distribute 110% and having your cap table recalculated such that your 5% turns into 1% in order to make room for the newly hired head of technology is rather demotivating for the team. Equity should be used to entice a valuable person to join, stay, and contribute. It should not be used in leu of salary that allows an employee to pay their bills. So, like a lot of questions, the answer is really, it depends. Analyzing the true picture of your long-term potential will allow you to more easily determine the correct mix.


Contact on Clarity

$ 5.00 /min

5.00Rating
Schedule a Call

Send Message

Stats

1

Answers
Calls


Access Startup Experts

Connect with over 20,000 Startup Experts to answer your questions.

Learn More

Copyright © 2020 Startups.com LLC. All rights reserved.