Taking a company public is usually the crowning achievement for entrepreneurs lucky enough to build a successful business.
Besides the pride they take in turning a scrappy startup into a reputable company underwritten by big Wall Street banks and valued and traded by public markets, they usually reap an enormous cash windfall. That's the prize for taking a risk and building something new. But what happens after that to executive compensation?
It turns out things are quite different for founder-led public businesses, such as those on our list of Founders 40 companies, compared with companies that go public without the influence of the founder. That's according to Theo Sharp, a managing director at Pearl Meyer, an executive compensation consulting firm in New York.
"For founders there really is no trend," Sharp says. "There are so many variables and they don't follow any particular formula."
By contrast, non-founder chief executives of newly public companies see their salaries go up somewhat predictably. Average base salaries for the heads of software companies, for example, spike by an average of 18.3 percent, according to Pearl Meyer's 2013 data, its most recent. CEOs of life sciences companies see a smaller salary bump of about 10 percent.
Of course, salary is only one component of total compensation. Other pieces of the pie include bonuses, company equity, options for stock, and other forms of pay.
With those things in mind, between 2013 and 2015, half of our Founders 40 received an increase in compensation following their initial public offering (IPO). Another 17 saw their compensation go down. (For two company executives there was no comparative data, and one reported no change in compensation.)
But the numbers are even less straightforward than that sounds.
Take Nick Woodman's compensation as an example. The founder of high-performance camera maker GoPro had an on-paper payout of $77 million in 2014. The company went public in June of that year, and in 2015 Woodman earned a comparatively modest $805,000.
His stock awards the year of the IPO were worth $74.6 million, but it's important to remember he's not likely to cash those in right away. They are less cash in the bank than incentive to stay and keep growing the company, compensation experts say.
"Once the company goes public, the compensation committee is looking at making sure the shareholders are getting their money's worth, and they are setting up incentives with executives to perform," says Andrew Challenger, vice president of business development at executive search firm Challenger, Gray & Christmas.
Similarly, Square founder Jack Dorsey saw his compensation from the company jump 60 percent in 2015. (Dorsey is also CEO of Twitter, and he is compensated separately for that role.) But the actual dollar figures are less startling: His compensation was $6,000 for 2015, compared with $3,075 for 2014.
These two are outliers in their own way, telling a story of extremes in compensation. Just as tellingly, there are plenty of company owners whose pay bumps have been pretty ordinary.
Aaron Levie, the co-founder and chief executive of cloud storage and workplace collaboration software company Box, saw his total compensation rise 2.3 percent in 2015 from the previous year, to $194,000. That includes a bonus of just shy of $39,000, and other compensation worth less than $300, for the most recent year.
It could be that Levie's scant pay increase is related to Box's poor stock market performance since going public in January 2015. (A Box spokesman declined to comment on Levie's compensation.) The company's stock is down 46 percent since its debut, as of midday Tuesday.
On the other hand, a falling stock price did not prevent GrubHub's chief executive Matt Maloney from taking in $8.3 million in 2015, a 131 percent increase from his 2014 compensation. That includes a 50 percent increase in salary to $600,000. However, the company's stock is down about 47 percent from its high last April, shortly after it went public. Maloney also declined to comment, through a spokeswoman.
One way or another though, compensation experts say founders soon opt for safety in their newly public companies.
"These founders have taken tons of risk...helping their companies to grow," Challenger says. "Once the company goes public, they may want to scale back the risk and want to get paid in cash and salary."