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:
Who Sets CEO's Salary?
Rules of Thumb
Bruce Bowers/TRC Industries (Reclaimer/mixer of silicone rubber), Stow, OH
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
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
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
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
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