Chief executive compensation at information technology start-ups in the mid-Atlantic region averaged $218,000 last year, the least of any region in the United States, according to a survey of 900 senior executives at 170 private companies nationwide.
Nationally, the average compensation for a chief executive at a young, privately held tech firm was $225,000, including base salaries and bonuses. Regionally, compensation was highest in California, at $279,000, the survey said.
The survey included responses from 216 executives at 25 companies in the region, defined as the Washington, Philadelphia and New York metropolitan areas.
"The mid-Atlantic seems to be a region with a lot of younger companies that are paying less because they are earlier-stage companies," said Aaron D. Lapat, managing director of J. Robert Scott, an executive-search company that conducted the survey with accounting firm Ernst & Young LLP and law firm Wilmer Cutler Pickering Hale and Dorr LLP.
Nationwide, base salaries for all executives surveyed increased just 1.9 percent from 2002 to 2003, an indication that tech start-ups are increasingly tying compensation to performance measures, such as whether earnings goals have been met, Lapat said.
"A larger and larger piece of the executive's comp -- bonuses and equity [awards] -- is being pegged to performance," he said.
In the mid-Atlantic, chief executives had a larger share of equity in their companies than did their counterparts across the country. Chief executives surveyed in the mid-Atlantic owned 9.2 percent of their companies, on average, up from 5 percent in 2002.
The survey suggests that tech start-ups have shunned the business model of the late 1990s, when chief executives paid themselves huge base salaries and bonuses, at least until the money ran out.
"In the tech-bubble time and for some years afterward, you had a lot of executives who seemed to be getting overpaid in cash," Lapat said. "Now many more executives are being paid around the [national] average. So now there's less 'burn.' Companies will need less money and the equity will be worth more."
With base salaries barely moving up, bonuses have become a larger component of executive compensation, the survey found. In 2003, the average tech executive surveyed received a bonus equal to 22 percent of base salary, up from 19 percent a year earlier.
Howard Freidman, founder and chief executive of Aptela, a McLean start-up that offers Web-based phone services, said the days of crazy salaries are over.
"You know, venture-funded companies are not running out to bring in highly compensated CEOs right now," said Freidman, who did not participate in the survey. "Founders [of companies] are taking lower compensation than they would otherwise, and lower than they have in the past."