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2007 Executive Compensation Study: Life Sciences Leads the Way, New England Pay Lagging

Xconomy Boston — 

First, the good news: salaries and bonuses for key employees of privately held firms in life sciences and information technology went up virtually across the board in the past year. Now, the not-so-good news: New England high-tech executives are in the middle of the pack (or lower) in compensation when compared to their peers around the country.

These are a couple of the conclusions that leap out—well, in some cases you have to dig them out—of the 2007 Compensation and Entrepreneurship Report in Life Sciences and a similarly named study in Information Technology that were officially released today. The annual studies were conducted by the J. Robert Scott executive search agency, law firm WilmerHale, and Ernst & Young, in conjunction with academics at Harvard Business School. I looked at the full, 84- and 72-page versions of the studies that are distributed primarily for participants. Released today for general consumption were scaled-down versions of the reports, but there’s a lot more in even the condensed versions than we can cover here.

The studies, based on surveys of some 1,000 key employees in life sciences and 1,200 in IT, looked at privately held companies by such parameters as financing round, revenue size, industry segment, and geography. They covered a variety of key jobs (13 in life sciences, 10 in IT), from CEO to head of human resources. Data about founder-execs was stripped out of the general survey and put into a separate section of the report, largely because founder compensation runs all over the map and it’s hard to draw conclusions from it (although, not surprisingly, founders get more equity—read on). All told, the survey covered 166 life-sciences and medical-device firms, and 244 information technology companies (just over half them were software firms). Roughly half the companies in each bucket had completed two or fewer rounds of financing—and a clear majority had fewer than 40 employees.

I’ve made lists below of CEO compensation by industry category and geography. But here are some basic observations. For starters, if you are a life sciences/medical devices CEO, you’re in a good place, compared to your IT counterparts. The average non-founder life sciences/medical devices CEO is earning a 2007 base salary of $281,000, a 3.9 percent increase from the 2006 average of $270,000. In IT, by contrast, the average CEO base salary is $227,000, up from 217K the year before.

Bonuses, of course, form a key part of the mix—and here, the IT execs have the potential to do a bit better. … Next Page »

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