Christian & Timbers Reports a 2.1 Percent Increase in C-Suite Compensation Among PE- Backed Tech Companies
November 20, 2024 – Christian & Timbers has released its report titled Analysis of C-Suite Compensation Trends at Private-Equity Backed Tech Companies, part of its executive pay in focus series. This analysis is based on proprietary compensation data from 2024, encompassing over 100 PE-backed companies and more than 400 executives. The data includes information on base salaries, bonuses, and exit-based payouts. The data shows a 2.1 percent increase in overall compensation for executive leadership at PE-backed companies. The percentage increase is higher at tech related companies particularly at middle market and upper middle market companies nearing an exit. The findings also show a slightly larger increase in equity compensation of 2.4 percent versus a total cash compensation increase of 1.8 percent.
“This year’s findings highlight how C-suite compensation is adapting amid economic fluctuations,” said Jeffrey Christian, CEO of Christian & Timbers. “We’ve observed increases in both cash and equity compensation, with cash increases slightly lagging behind equity gains, indicative of a market that values long-term investment in leadership.”
Other trends found include a significant resistance to increasing base compensation while providing a greater emphasis on performance based incentives. “2024 is proving to be a year where investors and executive leadership are hyper focused at reducing cost including an intense effort to keep compensation investment at a minimum,” Mr. Christian said. “Use of internal recruiters versus external recruiters. PE firms and the executive leadership at PE backed companies continued to make a concerted effort to decrease expenditures of outside recruiters, especially the first half of 2024. This has led to lay-offs at some of the bigger executive search firms.”
Christian and Timbers has seen a 32 percent increase in executive search work for PE backed companies in the third quarter and it will continue at this level for the second half of 2024. On average, gender representation in PE-backed companies reveals women hold significantly fewer leadership roles than male counterparts, with an average of approximately 21.6 percent across all C-suite positions, including 4.2 percent in CEO roles, highest percentage are women CMOs at 32 percent and women chief people at 76 percent.
CEO Compensation
Lower-Middle Market ($10M – $100M): Christian and Timbers found that base salaries range from $275,000 to $400,000, bonuses range between 20-55 percent, and equity stakes range between four to five percent. Over a four to five year period, exit-based payouts can range from $2 million to $5 million, assuming a successful growth trajectory.
Mid-Market ($100M – $500M): Base salaries range from $320,000 to $820,000, bonuses range between 40-100 percent, and equity stakes range between three to six percent. Over four to five years, exit-based payouts can reach $5 million to $10 million if the firm achieves successful growth and an exit event.
Middle-Upper Market ($500M – $1B): Base salaries range from $540,000 to $1,000,000, bonuses range between 50-120 percent, and equity stakes range between two to four percent. Over a four to five year period, exit-based payouts can range from $7 million to $30 million, with potential payouts as high as $30 million assuming the company achieves a successful growth and exit event.
COO Compensation
Lower-Middle Market: Christian and Timbers found the base salary of $250,000 to $375,000, with bonuses ranging from 20-45 percent. Equity stake of 1.5 to five percent, with exit payouts between $1 million and $2.7 million over three to five years.
Mid-Market: Base salary between $315,000 and $625,000, bonuses ranging from 35-50 percent, and equity stakes of one to 3.5 percent. Exit payouts can reach $2 million to $6 million over a three to five year period.
Executive Women Making Progress Closing Pay Gap
ON Partners released its 2024 Women’s Report in recognition of Women’s History Month. The report revealed a positive trend as the gender pay gap is narrowing year-over-year (YoY), with executive women earning an average of $452K, compared to executive men’s average of $461K. In addition, when isolating director and vice president roles as a pipeline of future C-suite executives, women are leading in average total compensation. A McKinsey Women in the Workplace report from 2023 highlighted the strides made in women’s representation in senior roles.
Upper Market: Base salary ranging from $455,000 to $720,000, bonuses ranging from 35- 110 percent, and exit payouts from $4 million to $15 million over three to five years.
CFO Compensation
Lower-Middle Market: Base salaries range from $185,000 to $350,000, with bonuses ranging from 15-35 percent, and equity stakes between one to 2.5 and three to five. Exit-based payouts typically range from $1 million to $2.2 million over a three to four year period.
Mid-Market: Christian and Timbers also found that base salaries range from $295,000 to $575,000, with bonuses ranging from 25-55 percent, and equity stakes of 0.8-1.8 percent. Exit-based payouts can range from $1.5 million to $6 million over a three to four year period.
Middle-Upper Market: Base salaries range from $370,000 to $660,000, with bonuses ranging from 35-70 percent. Equity stakes typically result in exit payouts ranging from $4 million to $10 million over a four to five year period.
Chief Product and Technology Officer Compensation
Lower-Middle Market: Base salary ranges from $195K to $355K, with bonuses up to 35 percent and equity stakes between one to three percent. Potential payouts range from $1 million to $2.75 million over three to four years.
Mid-Market: Base salary ranges from $295K to $560K, with bonuses ranging from 25-55 percent and equity stakes between 0.8 to two percent. Total payouts can range from $1.5 million to $6.5 million over three to four years.
Upper Market: Base salary ranges from $350K to $635K, with total payouts between $4 million to $12 million over three to four years.
CPO Compensation
Lower-Middle Market: Christian and Timbers found that base salaries range from $188,000 to $350,000, with bonuses up to 35 percent and equity stakes between one to three percent. Exit-based payouts typically range from $1 million to $2.5 million over three to four years.
Related: Tempting Talent Reveals Wide Gender Pay Gap Across U.S. Executive Search Sector
Mid-Market: Base salaries range from $295,000 to $545,000, with bonuses between 25-55 percent and equity stakes between 0.8-1.9 percent. Exit-based payouts can range from $1.5 million to $6 million over three to four years.
Upper Market: Base salaries range from $345,000 to $625,000, with bonuses between 30-50 percent and equity stakes leading to exit-based payouts of $4 million to $10 million over three to four years.
CTO Compensation
Lower-Middle Market: Base salaries range from $190,000 to $350,000, with bonuses between 15-35 percent and equity stakes of one to 2.5 percent. Total payouts typically range from $1 million to $2.2 million over three to four years.
Mid-Market: Base salaries range from $290,000 to $550,000, with bonuses between 25-55 percent and equity stakes of one to 1.9 percent. Total payouts can range from $1.5 million to $6 million over three to four years.
Middle Upper Market: Base salaries range from $350,000 to $620,000, with bonuses between 35-70 percent and equity stakes, leading to payouts between $4 million to $10 million over three to four years.
Chief Marketing Officer Compensation
Lower-Middle Market: Christian and Timbers found that base salaries range from $185,000 to $370,000, with bonuses ranging from 15-35 percent, and equity stakes between one to 2.5 percent. Exit-based payouts typically range from $1 million to $2.2 million over three to four years.
Mid-Market: Base salaries range from $280,000 to $560,000, with bonuses between 25- 55 percent, and equity stakes between 0.8-1.8 percent. Exit-based payouts can range from $1.5 million to $6 million over three to four years.
Upper Market: Base salaries range from $325,000 to $615,000, with bonuses between 35- 70 percent, and equity stakes resulting in exit-based payouts ranging from $4 million to $10 million over three to four years.
“This comprehensive analysis underscores the dynamic nature of compensation strategies within technology, healthtech, enterprise software, manufacturing, services, supply chain and related sectors, highlighting how executive pay aligns with organizational growth and market demands,” said Mr. Timbers. “The findings illustrate the critical role of strategic compensation practices in attracting and retaining top executive talent in a competitive and rapidly evolving industry.”
To read the full report, click here!
Contributed by Scott A. Scanlon, Editor-in-Chief and Dale M. Zupsansky, Executive Editor – Hunt Scanlon Media
