Clean tech firms stick to start up salaries

Friday, 29 January 2010, 07:10 Hrs
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Bangalore: Clean technology firms seem to be sticking to their startup roots when it comes to remunerating their executives as a new study reveals. According to a study by San Francisco-based consultancy Presidio Pay Advisors, listed firms operating in low carbon industries still resemble startups with a surprisingly large proportion of executive compensation 'at risk' in the form of equity and other performance based incentives.

The study was based on the executive compensation data from 95 publicly traded clean tech firms, reports BusinessGreen. In another anomaly compared to conventional businesses, the largest clean tech companies offered the most "at risk" compensation to their executives. For example, clean tech companies with revenue of over a billion a year had on average over 78 percent of CEO pay dependent on company or CEO performance. They also tended to have a higher proportion of founders who have stuck with the companies and held substantial stakes in the business. The study revealed that founder CEOs of clean tech companies held a median of eight percent of total shares outstanding.

Kyle Holm, a Principal at Presidio Pay Advisors, said to BusinessGreen that the clean tech companies studied had been listed for a median period of 15 years, but were still using compensation mechanisms typically adopted by start ups in order to conserve cash and incentivise executives to pursue rapid growth. "It is unusual for such large companies to pursue this strategy as when you can afford to pay cash it usually makes sense not to give away equity," he explained.

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