The Evolution of CEO Compensation in Venture Capital Backed Startups

Michael Ewens, Ramana Nanda and Christopher Stanton

No rku3m, SocArXiv from Center for Open Science

Abstract: We document new facts on the evolution of founder-CEO compensation in venture capital-backed startups. Having a tangible product ("product market fit") is a fundamental milestone in CEOs' compensation, marking the point where liquid cash compensation increases significantly – well before an IPO or acquisition. "Product market fit" also coincides with key human capital in the startup becoming more re- placeable. Although increases in cash compensation over the firm lifecycle improves the attractiveness of entrepreneurship relative to a contract with flat pay, we find that low cash compensation in the early years can still deter entrepreneurial entry.

Date: 2020-05-20
New Economics Papers: this item is included in nep-ent, nep-pay and nep-sbm
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:osf:socarx:rku3m

DOI: 10.31219/osf.io/rku3m

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