The private company/emerging growth market has several hubs throughout the US and other parts of the globe. But the most active region…by far…is the San Francisco Bay Area. Here, the technology industry dominates the corporate landscape – and shadowing this industry are a bevy of investors including venture capitalists, angel investors, family wealth investors, corporate venture investors – and more.
The San Francisco Bay Area includes the following geographic areas:
- Silicon Valley and South Bay
- San Francisco
- The Peninsula (region between San Francisco and Silicon Valley)
- The East Bay/Oakland; and
- The North Bay (across the Golden Gate Bridge and into Marin County)
This market continues to grow and has been thriving since the end of 2017. Innovation and venture capital (“vc”) dominate the landscape in this geographic region and the rise of the “next-gen” technologies is contributing to robust growth. Consequently, a startup is born every minute.
This activity is having a direct impact on the legal employment market at all levels – as private company executives are appreciating the value of hiring strong legal talent sooner rather than later. This dynamic is particularly applicable to the hiring of a new General Counsel. So a robust number of opportunities exists in the private company sphere for this constituency. Compensation for this group will vary depending on the stage of a company’s life (and whether it is truly The Real General Counsel Deal). Consequently, companies through a Series A round of funding will typically offer a comp package different than those mid to late stage companies that have been through a Series D or higher in the alphabet (Yes, there are Series A companies out there hiring GCs).
A company will often hire its first General Counsel in the mid to late stage of its life so I will assume this is the company profile for purposes of your question. So…for a General Counsel in a mid-sized, later/mid stage technology startup company in the San Francisco Bay Area, “market” compensation is as follows:
Base Salary: $300,000-ish – $350,000 (in non-Bay Area Markets = 15%-20% lower)
Over the last decade, base compensation for GCs in mid to late stage private companies has increased between 20%-35% – and in the last 18 months has increased 15%-20%. Of all the compensation knobs, this one has turned the most in a forward direction for candidates. As 2020 has begun, the floor has gone up and the average base salary in today’s “Bay Area/Silicon Valley” market is $325k. For those in lower cost of living markets, the number ranges are 15%-20% lower.
Signing Bonus: Yep.
It used to be a non-factor, then it was an exception reserved only for the most coveted candidates. Today, the signing bonus is one of the most frequently used strategic carrots that has demonstrated significant impact in pulling a desired candidate across the finish line. So if companies can’t…or won’t go higher on the base salary, target bonus or stock, they’ll sweeten the pot with more cash in the form of a signing bonus. And that usually does the trick. Most common signing bonus numbers range from $30k – $100k.
Target Bonus: 30% – 50%
Target bonuses have historically been all over the map in private companies – and it was not uncommon for a private company to offer a target bonus in the form of a goose egg. If it did offer a bonus, it was quite modest. But today, a target bonus for a technology startup General Counsel is reliably in the 30%-50% range. Company executives are also leaving themselves wiggle room on the bonus by targeting a range rather than a set number – giving them the ability to go higher in a compensation negotiation. Keep this in mind when you are negotiating your offer: the target bonus is on the table.
For those of you considering an offer with a lower than market target bonus, don’t fret. Inevitably over time – as the company scales and needs to compete more effectively for talent (typically for top flight engineers), it will revamp its executive compensation and add or increase the bonus to 40% or 50%. So know that an anemic target bonus will not be permanent and should not be a deal breaker unless you financially cannot swing a bonus void.
Stock Grant: .50% – .70% as a percentage of company value (in non-Bay Area Markets = .30% – .60% )
The stock grant is often in the form of stock options as opposed to RSUs, but this is changing as well. 8 to 12 years ago, the stock grant range was .40% – .75% with most grants settling in around .50%. 4 to 6 years ago, that percentage dipped to .20% – .50%. Today, the pendulum has swung back the other way a bit and the current range is .50%-.70%. Of course there are outliers on the low and high end, but these are the typical percentages in today’s market. For those in secondary emerging growth markets, the ranges are lower and are in the .30%-.60% range.
Finally, it’s important to note that a few years ago private companies had less flexibility on cash than they did with stock because internal comp grids and a compressed system often limited their ability to go materially higher than their stated range. This does not define the market today – and companies have more flexibility and looser pockets when it comes to the overall cash component of an offer, whether it’s base salary, signing bonus or both.
Compensation for in house lawyers at all levels has enjoyed a steady rise – and the tech startup GC is no different. The active market and convergence of other factors in the profession have created a landscape with greater employer flexibility. So if you are negotiating an offer, keep this in mind as you assess the numbers you have been offered…and your subsequent asks.