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Part 2: VC-Backed CMO Compensation Ranges
What salary, bonus and terms can a CMO negotiate for, and how should they do it?
In my blog yesterday, Part 1: CMO Compensation Components, I went through the definitions and context of what can be negotiated based on my experience as an advisor to VC-backed companies $30-500M in revenue. Today I’m going to talk about actual ranges. Summary here and lots of important context following
Ranges Are Dependent On Many Factors
There are a lot of factors as to where any job offer will fall:
Type of funding: VC / PE / Bootstrapped / Public - Public pays more than private, VC-backed flush with money sometimes pays more than bootstrapped. Sometimes PE is more thrifty, often they pay more based on financial milestones achieved.
Region: US generally pays higher than other regions
Remote or In-Person: In-person roles in expensive cities sometimes are forced to pay higher premiums. A fully remote company might be comparing two candidates in different regions with very different salary expectations.
Scale of company: Larger organizations can afford more cash comp and might offer less equity and ownership. Smaller orgs offer more equity, and less cash.
Philosophy of the founder / CEO: Some are more thrifty than others, especially if they aren’t paying themselves well yet!
Experience of the Candidate / CMO-Related Titles
The other major factor in such wide ranges is the difference in experience brought by different marketing leaders. The leader of the marketing department can have many different titles at different scale companies. In VC-backed companies, the first marketer might be an individual contributor. A Head of Marketing might follow that’s really “director-ish” level. A later Head-of-Marketing might be more of a VP-level candidate. Or many Series A/B companies might just call the Head of Marketing VP of Marketing. As companies scale, they may have an SVP or an EVP before they are willing to make the big leap to CMO, or they may have a full-fledged Chief Marketing Officer. The ranges below roughly cover this range of titles with lower titles being lower in the range. The more structured data that Venture Capitalists provide to their portfolio founders, or that recruiters source from data agencies will generally have a level with 25th/50th/90 percentile ratings to account for experience differences.
Recruiters or founders might get formalized documents like this one from Option Impact that give them detailed information — while CMOs have very few datapoints of their own to compare.
VC-Backed Company Ranges
Despite the economic downturn of the last year including layoffs and financial problems of many companies, my research indicates that CMO salaries have not declined, and instead have been continuing to moderately increase.
SALARY - For VC-backed tech companies, my research indicates that the base for smaller companies (under $150M revenue) is roughly in the $200-350k range and the base for $150M + companies is more like $300-450k, larger companies and public companies climb higher still. First-time CMOs or VPs of Marketing will get lower salaries in these ranges, multi-time, accomplished CMOs might be able to command salaries even higher than these ranges. But they are roughly in the ballpark.
BONUS - A few years ago, my research showed that bonuses were in the 20%→50% range for CMOs. Based on my recent conversations with VCs, the bonuses are orienting higher in the range, frequently around 30-40%. As CMOs are asking for and being held accountable directly for pipeline and revenue, they are being asked or asking for more skin in the game and on the up-side. This can also be true for Product-led-growth CMOs who are directly responsible for revenue.
TOTAL COMP - These trends in Salary + Bonus leave the total comp for earlier stage VC-backed companies in the $300-450K range (companies under $150M in revenue), and $450-650k range (companies over $150M in revenue)
SIGNING BONUS - I don’t have any data on this as a trend. Still worth asking for as one of the components.
EQUITY - Historically CMOs negotiated for percentage ownership and it revolved around 1%. Smaller companies could offer more (.9-1.1% ish), and larger pre-public companies generally offered less (.5-.7%ish). Public companies could offer actual, market-justified value, often offering RSUs instead of stock options. In the 2021 high-flying days of astronomical valuation, companies started moving away from % ownership because it implied crazy amounts of value. But that bubble has pretty much burst. Many CMOs are trying to figure out what their equity is worth. Will their company be able to grow into their previous valuation and beyond? Will they have to take a down round (and accept money at a lower valuation, lowering the market value of CMOs’ equity too)? According to my sources, CMOs are negotiating around % ownership again, and the %s are quite close to the historical norms.
CHANGE OF CONTROL CLAUSE - When I look at comp data I’ve collected, I’m always interested in what the BEST people have, not the rest of us still learning. 18 months ago when I did my last survey, I looked at the top 20% of my 340 respondents, the “high achievers” making over $1M/year in equity. Of the high achievers, 80% had change of control causes!
80% of High Achieving CMOs have a Change of Control Clause
55% of those have a double-trigger, 45% of those have a single trigger
EXERCISE TERMS: In my high achievers data set
41% Had Early Exercise
30% Had Extended Exercise
17% Had Promissory Note/Cashless Exercise
Experienced CMOs are making some progress asking for these special terms. (Reminder to look at my blog from yesterday if you’re still learning these terms)
SEPARATION AGREEMENT: As mentioned in my Part 1 article about types of elements, you can negotiate for salary, pro-rated bonus, healthcare and potentially preferential options treatment on separation. When I looked at the market before, nearly 50% of the 350 CMOs I surveyed didn’t have separation agreements. The “High Achievers” segment was more likely to have one, but still largely under 6 months.
Get an Employment Attorney
When we were young and making less money, it made sense to do our own taxes and negotiate our own contracts. When you’re the officer of a company you should get a professional to help you. I LOVE my employment attorney, Mary Russel, of Stock Option Counsel (tell her I sent you). Having someone who negotiates these terms all the time can help you ‘know what you don't know’ and advise you on both the business and the legal terms.
It’s worth considering fairness in the C-Suite
One easy way to start negotiations is to ask if the package they are offering you is commensurate to the terms in place for the CFO and CRO. It’s fair for you to ask for fair terms. It could be a way to get something not immediately offered if they already have it with others.
If you’re more experienced than the leadership team in place, you might be asking for terms they haven’t granted before. They might “need to go to the board” to get approval. It’s okay to make them do that. If what you’re asking for is reasonable and professional for your role, the board will be familiar and not surprised. You might be able to change the policy for the other executives. And if you don’t, beware of resentment when the next super-experienced exec comes in and gets it. It’s very hard for you to change your terms after you’ve already been hired and are in-seat.
What’s the lifetime value of this opportunity?
Negotiating your best possible deal in any specific situation is great. But the bigger question is the TOTAL VALUE of this next move in your career:
Is it in a rapidly growing market space? If you worked for the next Facebook / AWS /OpenAI when they were small, it would be life-changing, even if they offer you a bit less than a competing offer you have in hand.
Is it a step up in your responsibilities - from running a function to an entire team?
Are the investors and executive leadership team really exceptional? Most of my best jobs came from being pulled by a former boss or colleague. The quality of their opportunities in the future affects the quality of your opportunities in the future.
$25k, $50k, $100K, even $200K might pale in comparison to a really amazing job opportunity. It’s worth considering all of the factors. Don’t get tunnel vision about a compensation gap if the opportunity is epic.
Don’t be Unpleasant - You Could Lose the Offer
It’s okay to negotiate for a deal that’s fair and professional. As you negotiate, continue to reinforce how excited you are for this market category, to work with this CEO, to work at this company. Keep reinforcing why you are uniquely qualified for this role. And if you need to go back and forth several times, that’s okay. Some of your requests might need to be “taken to the board” since they haven’t approved them for other executives before. You can ask for what you want and need without being unpleasant or jerky. If you get really aggressive and self-centered in negotiations, it will reflect badly on you and you could lose the offer. I’ve heard of it before! This is your first significant conflict resolution — show them how great you’ll be at negotiating contracts with others, getting good terms, and creating a win-win for everyone.
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