Brad Stadler has been a tech recruiter at the executive search firm he founded, True, for more than 10 years. He tells TechCrunch’s Danny Crichton that he’s seeing some crazy startup recruitment strategies that resemble 1999.
One particularly over-the-top story Stadler relayed to TechCrunch was about a near-IPO company that was willing to pay an executive-level candidate a $US1 million signing bonus — and got turned down.
This year, a startup with revenues of $US10 million wanted to find a new chief executive following its Series B raise and offered $US450,000 in compensation (5% of revenues). Another startup, quickly growing and approaching an IPO, did a search for a CEO to lead it onto the public markets. In addition to a hefty compensation package, the board of the company is willing to put up a signing bonus of $US1 million, to be delivered in two tranches over a year, for a vetted candidate willing to step up and sign the paperwork. Their offer is turned down.
Stadler says massive signing bonuses used to be rare, but they’re becoming a more common recruitment tactic among startups. Another stat he and TechCrunch dug up: “In the time period between 2013 and July 2014, salaries for CEOs increased by 11%, with chief financial officers and VP of Sales receiving a 14% and 13% increase in compensation respectively,” TechCrunch writes. “Notably, the salaries of VPs of Engineering have been flat over the same period.”
Large companies have seen some eye-popping payment packages while recruiting executives. Henrique de Castro, for example, was lured to Yahoo for a fleeting period by Marissa Mayer, who offered him a $62 million package over four years. The package was comprised of a $US600,000 salary, $US540,000 bonus, $US36 million in stock awards, $US1 million in cash, and $US20 million more in stock. But two years later when de Castro left Yahoo, he walked away with about $109 million instead.
At a startup or pre-public company, a $US1 million signing bonus may be another example of irresponsible cash-burning that has a number of investors concerned about the state of the industry.