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We are just moving into the realms of appointing a CEO and are unsure of what we should expect from a CEO We have never done this before and are very green in this particular area.

I know we have a good thing from the interest and the awards that we have won so far. We have boot strapped the venture ourselves until now,but know that we need funding and a leader with experience in his field to take this to the next level

We have 2 people very interested in the position already, both of whom are from the states - we are a UK based.First concern is will the time difference be an issue for us were already working our socks off,ultimately their is better access to funding in the US and we want to roll out their asap.

I have had mixed advice on how much equity to offer the CEO? -

We have been developing the product for nearly three years,and it almost ready to roll out en-mass we have been advised that between 10 -15 % is an acceptable amount at this stage? However one of the CEO's associates has indicated we should be looking at giving up 35%? Also they suggested giving away equity for time only (full time) and no cash for the shares?

Also before we talk to any contenders it's key that we know what we want and that we look at least slightly clued up,although any CEO worth his salt will be able to see where naive, however it shows effort awareness and due diligence on our part.

So we need a set of KPI's and a road map for year 1 to present to any applicants. Can anyone suggest a set? eg: Year 1 Raise funding to the tune of 500k,Form xx strategic partnerships,Secure xx in additional resource etc also I'm sure there are things we haven't considered yet?

To recap on the above

1 How much equity to give to a CEO in total and over what period?

2 On signing how much equity should we give him/her?

3 What is a good / standard set of KPI's for a CEO year 1?

4 Will the time difference USA and UK be an issue for us and them?

Really appreciate some guidance on this as there isn't much available online

Many Thanks :)

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1 Answer

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There are a couple of things you need to consider when hiring a CEO. The most important things to consider include:

  • They understand your vision
  • All of you get along
  • They can raise the money needed to run the company

Now, to your questions.

  1. Equity for the CEO is usually 5% of the total in a VC backed company. Some can go as high as 10% but that's pushing it. The thing to remember is that this percentage should be maintained at each round. Now, if they will be getting founders stock, that's a bit different since no VC money has been put in yet. On that, you should split the equity based on the other founders and their contributions.

  2. Equity on signing should be minimal unless it's founders stock, then it's whatever it is.

  3. The main job of a CEO at a startup is to raise money. So, the KPI's should be strongly weighted toward that. The other would be garnering business once you have a product.

  4. Yes. A startup CEO needs to be in the same time zone/building. That will be the only way to understand what is going on. I would highly advise against hiring a remote CEO. You will have enough communications issues being in the same building. Add a different time zone and remote and that's a recipe for disaster.

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Thank you very much Jarie some good advice! – Larry Mar 24 '10 at 11:56
No problem. Good luck in your search and getting your product to market. – Jarie Bolander Mar 24 '10 at 12:34
Hey Jarie I looked at your site www.thedailymba.com its a great resource, shall spread the word – Larry Mar 25 '10 at 14:55
@Larry. Thanks for taking a look and spreading the word. – Jarie Bolander Mar 26 '10 at 1:30

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