SERVING THE QUANTITATIVE FINANCE COMMUNITY

albertmills
Topic Author
Posts: 380
Joined: March 13th, 2007, 1:09 pm

### Silicon Valley Compensation

There's a law suit occurring right now which involves a silicon valley big wig. She used to work for a premier venture capital firm and now she's the CEO of reddit. The link in the article below reveals these figures: $560 k a year working for the venture capital firm and$258 k a year as CEO of reddit. These don't seem like the huge amounts of money you associate with silicon valley jobs. I realise that it's startup founder who make the mega bucks, but I was surprised to learn that the CEO of reddit only makes 258k. "At the time she left Kleiner, Pao's base salary was $33,333 per month, plus a yearly bonus of$160,000, making a total yearly compensation of $560,000 per year.Pao is the interim CEO of Reddit, a popular news aggregation site. She is paid$175,000, plus a target bonus of $80,000, in addition to stock options, for a total of$258,000 per year."http://www.usatoday.com/story/tech/2015 ... /70234934/

trackstar
Posts: 27270
Joined: August 28th, 2008, 1:53 pm

### Silicon Valley Compensation

You do understand that a big chunk of VC compensation comes when there is an exit for a portfolio company through an IPO or strategic sale. When stock is also part of the compensation package, there will be a lock up (at least 6 months post-IPO), but this can bring total comp up into the millions. Founders are not the only ones who make good money - often the critical early stage employees will have good packages and in some cases many other employees will become millionaires of one sort or another after an IPO. Check Google millionaires. At IPO in August 2004, about 900 people hit 7 figures.
Last edited by trackstar on March 12th, 2015, 11:00 pm, edited 1 time in total.

albertmills
Topic Author
Posts: 380
Joined: March 13th, 2007, 1:09 pm

### Silicon Valley Compensation

I know that's supposed to be the case for VC's, but is stock also a large part of the reddit CEO comp though?

trackstar
Posts: 27270
Joined: August 28th, 2008, 1:53 pm

### Silicon Valley Compensation

QuoteOriginally posted by: albertmillsI know that's supposed to be the case for VC's, but is stock also a large part of the reddit CEO comp though?I haven't read your links yet, but I would imagine so. This is thought to align incentives properly.It's more similar to trader's compensation, where base is good, but the real upside is based on actual performance and bonus is tied closely to that (and in this case, stock performance too, as a reflection of CEO performance).On the investment side, VCs are often allowed to put their own money into deals, so that is another way that they benefit from being near the deal flow.It's not a COI as long as it is disclosed to the limited partners.
Last edited by trackstar on March 12th, 2015, 11:00 pm, edited 1 time in total.

ppauper
Posts: 70239
Joined: November 15th, 2001, 1:29 pm

### Silicon Valley Compensation

you quote from a USA Today linkthe very next paragraph.....QuoteThat's a lot lower than her compensation at Kleiner, but both are a long way from \$16 million.The difference is the potential share in the profits senior partners at venture capital firms can make if the companies they've helped start do well. Long-term, it is profits from those investments that make venture capital such a lucrative field.Even if Pao had gotten a payout from only one of the funds at the firm, she could have gotten millions, Lucas said.another sourceQuoteOrrick attorney Lynne Hermle, representing Kleiner Perkins, is back up to ask about Pao?s compensation for becoming interim CEO of Reddit. She asserts that Pao has ?millions of Reddit stock options,? and Pao agrees that is now the case.

trackstar
Posts: 27270
Joined: August 28th, 2008, 1:53 pm

### Silicon Valley Compensation

Kleiner should have settled.

Posts: 23951
Joined: September 20th, 2002, 8:30 pm

### Silicon Valley Compensation

First, everything's negotiable! Second, it sounds like she left Kleiner several months before getting the job at Reddit so she may have taken a pay cut. Third, it seems like she was hired to help Reddit raise money. If so, she might have accepted deep OTM calls which could become extremely valuable if she were able boost the valuation of Reddit.

ppauper
Posts: 70239
Joined: November 15th, 2001, 1:29 pm

### Silicon Valley Compensation

QuoteOriginally posted by: trackstarKleiner should have settled.agreed

tagoma
Posts: 18351
Joined: February 21st, 2010, 12:58 pm

### Silicon Valley Compensation

The color line persists when black and Latino workers, respectively, make up 2 percent and 3 percent of employees at Google ? but according to a recent study, blacks and Latinos comprise 41 percent of Silicon Valley?s security guards ? 72 percent of its janitorial staff, and 76 percent of its groundskeepers.

ppauper
Posts: 70239
Joined: November 15th, 2001, 1:29 pm

### Silicon Valley Compensation

QuoteOriginally posted by: tagomaThe color line persists when black and Latino workers, respectively, make up 2 percent and 3 percent of employees at Google ? but according to a recent study, blacks and Latinos comprise 41 percent of Silicon Valley?s security guards ? 72 percent of its janitorial staff, and 76 percent of its groundskeepers.point taken, it is impossible for blue collar whites to get hired in silicon valley