Setting the CEO's Salary

Various self-compensation strategies by growth-company CEOs.

How much should you pay yourself? That's a tough question for any CEO to answer, since he or she must balance personal needs against the often-insatiable financial cravings of a growing business. To gain some insight into self-compensation strategies that work, Inc. surveyed 18 entrepreneurs representing a range of industries and growth stages. Below, some highlights from those conversations:

CEO/Company

Sales

Who Sets CEO's Salary?

Any Guidelines?

Rules of Thumb

Bruce Bowers/TRC Industries (Reclaimer/mixer of silicone rubber), Stow, OH

$4 million

Board of directors

Fixed formula, weighted to reward pretax profits

CEO knows his compensation can vary by $100,000 or so annually, depending on corporate profits

Ali Hashemian/Imposters (Costume-jewelry-store chain), S. San Francisco, CA

$17 million

Board of directors

Published lists and surveys

CEO accepts only about 70% of board's recommended compensation, to set an example of putting corporate growth first

Larry Amon/Diamon Images (Supplier to semiconductor manufacturers), Los Gatos, CA

$7 million

Amon and his partner

Owners' living standards, which mean about half the industry CEO average

Owners plan to take the company public, so don't want to "look as though we gouged the company"

Doug Rhymes/Discover the World Marketing (Hotel and airline marketing firm), Scottsdale, AZ

$9 million

CEO

Published surveys and self-imposed cap of four times average employee salary

CEO feels his pay inevitably becomes public knowledge, so needs to limit it to keep morale high

Barry Burnsides/Dawn VME Products (Computer-board manufacturer), Fremont, CA

$6 million

CEO-picked "corporate council of outsiders" and accountant

Industry average as well as corporate and personal tax position

CEO went 15 months before taking a salary, but after four years of 100% growth, now feels he deserves what competitors' CEOs earn

-- Researched by Michael P. Cronin and Christopher Caggiano

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