Triangle Business Journal - Take a look at Hutchison Law Group’s recently released compensation survey and it’s tempting to conclude that life sciences companies must be taking it on the chin just as badly as banks and real estate firms. The annual survey, which collects information from technology and life sciences startups based in North Carolina, found that life sciences chief executives took home an average salary of $242,002 in 2007. That’s a 14 percent drop from 2006, when the average salary was $282,221.
Bonuses also plummeted, from $124,057 in 2006 to $65,424 in 2007. Does that mean a life sciences meltdown is under way - or soon will be? Local experts don’t think so.
“I suspect what we’re seeing is a result of statistical methodologies and different sample sizes,” says Chris Matton, a corporate lawyer at Kilpatrick Stockton. Matton doesn’t believe that the life sciences industry has been hit hard by the overall economic doldrums and adds that, “It’s going to continue to be a war for talent” in both the life sciences and technology worlds.
You won’t get a counterargument from Kathleen Worm, even though she’s a partner at Hutchison who helps oversee the survey. She points out that the numbers can change based on which companies respond to the voluntary study each year and what stage of development they’re in. The number of life sciences respondents increased from nine last year to a dozen this year. Having that many new companies involved in such a small sample size could skew the results.
The salaries among this year’s respondents ranged from $160,000 to $365,000, with a median of $233,500.
Yet there may be other reasons for salary changes. Veteran venture capitalist Art Pappas says starting salary used to be more heavily emphasized to attract talent from big pharma to local life sciences startups. That’s begun to change, with bonuses and equity stakes playing a more important role in the overall compensation package.
“We are seeing a much more balanced approach,” says Pappas, the managing partner of Pappas Ventures in Durham.
CEOs received an average equity stake of 14 percent in the life sciences firms polled by Hutchison, up 1 percent from a year ago.
In addition to the life sciences companies, 16 technology firms responded to the survey. Their CEOs, on average, pulled down a salary of $176,052 and collected a bonus of $69,661. They also had an average equity stake of 14 percent in their companies.
One firm was particularly thrifty, paying its CEO just $50,000, while the highest salary recorded was $250,000.
Hutchison does not release the names of the companies that respond to the survey. It polled 107 companies in the state, but just 28 of those responded to the query.
All of the firms either have received funding from an institutional investor or landed a minimum of $500,000 from angel investors. Firms ranged in size from fewer than 10 employees to one company that had more than 100. While the majority posted revenue, just four were profitable.
Tech company CEOs typically get paid less than their life sciences counterparts. There are a couple of potential reasons for the discrepancy.
Life sciences firms usually take longer to provide a return to investors - roughly five to seven years, compared to three to five for tech concerns. Life sciences boards are willing to pay more to lock in the executives for the long haul.
Secondly, life sciences chiefs often have more advanced degrees, which can lead to a heftier check.
