Thelander PC Digest: November 2024

An Inside Look at Salary Increases

Welcome to the Private Company Digest. As we near the end of the year and your company plans for 2025, we’re addressing questions about salary increases and compensation trends to help you level up your compensation game. Salary increases can serve multiple functions:

• Correcting or adjusting salaries
• Rewarding performance
• Incentivizing employees
• Adjusting for cost of living

Ultimately, these measures aim to minimize turnover, retain key employees, and ensure competitiveness in the market.

Determining the size of a salary increase largely depends on the starting point for each position— specifically, how competitive the current salary is, the value of the role to your organization, and the individual’s level of experience and contribution. If the total base pay aligns with the 75th percentile or maximum market rates, the salary increase may be smaller compared to someone at the median or lower percentiles. Below is the year-over-year market data for a CEO of a biotech company that has raised between $5 and $29.9 million.

What does the data tell us? The median total cash for CEOs at biotech companies that raised between $5 and $29.9 million decreased in 2022 and 2023 from $250,000 to $225,000 before increasing in 2024 to $280,000 – higher than what it was in 2021. When the median total cash was lower, the median total founder equity was higher. 

When looking at the 75th percentile, the total cash has steadily increased since 2021 from $330,000 to $399,500. Top talent gets paid top dollar! The total founder equity and non-founder equity percentages have stayed relatively stable YoY without any major fluctuations. If you changed the financing bracket, you would see the cash and equity change. Now equipped with market data trusted by thousands of the world’s top private companies, let’s explore salary increase percentages and factors.

Below we see that since 2018, median salary increases for CEOs have remained consistent YoY. However, there’s been noticeable fluctuation at the 75th percentile.

Here are the key takeaways from the salary increase factors for CEOs in 2022 and 2023, as illustrated in the accompanying chart:

Merit or Performance: The primary reason for salary increases in 2023.

Cost of Living/Annual Increase (COLA): The second most common reason for salary increases in 2023.

Inflation: Less frequently cited as a reason for salary increases in 2023 compared to 2022.

How will this data change for 2024? Participate in the Thelander Private Company Year-End Merit Increase, Option Pool & Bonus Survey to secure your free report on salary increase percentages, factors and more. You will also receive access to comp data on Thelander’s proprietary platform to see how your current base salaries, most recent bonus, target bonus, total cash and founder/non-founder equity stack up to market. 

Participate in the Thelander Private Company Year-End Merit Increase, Option Pool & Bonus Survey