Hello and welcome to Modern CEO! I’m Stephanie Mehta, CEO and chief content officer of Mansueto Ventures. Each week this newsletter explores inclusive approaches to leadership drawn from conversations with executives and entrepreneurs and from the pages of Inc. and Fast Company. If you received this newsletter from a friend, you can sign up to get it yourself every Monday morning.
Public company CEOs are richly compensated. The median 2022 pay package for CEOs in the S&P 500 was $14.5 million, down slightly from the previous year, but more than double the median comp for S&P 500 CEOs in 2012. (In the same period, the federal minimum wage has remained flat, while median weekly earnings for full-time wage and salary workers in the U.S. grew roughly 36%.)
Founders, on the other hand, may not be paying themselves enough, says Waseem Daher, cofounder and CEO of Pilot, an accounting firm that serves startups and small businesses.
Corporate boards of directors, which determine executive compensation, have plenty of information about CEO pay levels via proxy statements and consultants. However, entrepreneurs, who often set their own pay, don’t really know what their peers make.
A peek at founders’ paychecks
That’s why Daher says he started the Founder Salary Report, a snapshot of pay levels gathered from 500 founders from around the world. The findings show entrepreneurs tend to pay themselves modestly: Some 46% of participants in the study pay themselves less than $100,000 per year, and 5% don’t take a salary at all.
Daher—a three-time founder himself—says he understands why entrepreneurs are reluctant to reward themselves handsomely. They figure they can use the money on other things, like hiring employees or spending on lead generation. And some founders may take less in cash compensation because they believe their equity will translate into a big payout if they sell the business or take it public in the future.
Pay what you’re worth
Daher contends that living paycheck-to-paycheck can be a bad thing for a founder. “If you’re constantly distracted, wondering how you’re going to pay rent or personal expenses this month, you’re not going to be the best executive for the business,” he says.
Daher hopes founders use the report, which is sortable by industry and region, to help them understand their value, especially as their companies grow and take on investors. “It gives you the confidence, when you talk to your board or investors about this, to say, ‘here’s some hard data about what everyone else is doing, and therefore my request is not out of left field or unreasonable,’” he says.
Share your salary stories
If you’re a founder reading this newsletter, how did you arrive at your pay package? Please share your stories with me at stephaniemehta@mansueto.com. I will share some of the most creative and helpful ideas in a future newsletter.
Read and listen: executive comp
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