2011 Atlanta Technology Executive Compensation Survey

Conducted by Technology Executives Roundtable, the study was designed to identify executive compensation and company ownership among Greater Atlanta technology companies during calendar year 2010. Overall, 74 public and privately-funded technology companies across a wide range of market segments, including software, hardware and services participated in the survey.

Companies participating in the study were led by software and SaaS developers (58%), technology consulting/service firms (8%), Internet services (7%), professional services/consulting service providers (3%), hardware developers (1%) and others (23%). The majority of firms were privately funded (68%) with Venture Capital and Angel funding the two most common sources, in business longer than five years (74%) and had 2010 revenue in excess of $2 million (72%). Most companies had less than $25 million in revenue (85%), with 28% under $2 million and 39% with $2-10 million. Only six companies (8%) had more than $50 million in revenue.

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2011 Compensation Executive Survey Findings

Revenue Growth
The majority (73%) of companies in this years survey experienced revenue growth, with 32% of companies growing by more than 25%. Only 11% of companies saw a decline in revenue, while 16% of participants saw no change in revenue from the previous year.

2010 Revenue Growth

Unchanged
16%

Base Compensation
Overall, average base salaries among internal executive teams ranged from $221,239 for CEOs to $106,711 for Controllers. For those few organizations that compensated independent directors (11% of respondents), average director salary was $76,244. As expected, CEOs commanded the highest average salary in the executive suite, followed by Presidents, COOs and CFOs, and then by other executive team members. Within the executive suite, Senior Sales, Marketing, Business Development and Technology/Development executives earned similar salaries. Controllers remained one of the lowest salaried members of the executives at $106,711. One interesting note, when compared with 2010 findings, average salaries among the majority of executives increased, with COOs seeing a 20.88% increase, followed by Presidents at 18.19% and Senior Business Development Executives at 10.65%. The remaining executives saw an increase of less than 10%. Only Controllers and Senior Marketing Executives

Decline
11%

Growth
73%

salaries were flat. The eight Independent Directors identified in the survey had the largest average salary increase, averaging $76,244, up 68.72% from 2009. Note that a relatively small number of respondents actually identified an Independent Director, so average base salary information related to Independent Directors is skewed by a few high percentages within these low number of responses.

Average 2010 Pay Increase

COO President Senior Business Development Executive CFO Senior Engineering/ Development Executive CEO Senior Sales Executive CTO -0.59% -0.87% 3.82% 2.27% 1.47% Controller Senior Marketing Executive 0% 5% 10% Average 2010 salary increase (compared to 2009 salaries) 15% 20% 6.09% 8.18% 10.65% 18.19% 20.88%

Target Bonus and Compensation Plans

Team Bonus and Commission
Total bonus compensation potential for Technology Executives in 2010 ranged from an average high of $97,500 for Presidents to a low of $22,132 for Controllers. Of this available 2010 bonus compensation Sr. Sales Executives, CEOs and COOs lead the executive suite with $79,766, $60,542 and $43,952 of total bonus potential earned. Commission potential for sales executives averaged $123,902 at 100% of goal for the Senior Sales Executive and $61,400 at goal for the the Senior Business Development Executive.

Compensation Plan Percentage Increase*

11 to 15%
4%

over 25%
7%

6 to 10%

16%

1 to 3%
41%

Compensation Plans for 2011

For 2011, 59% of companies surveyed plan to increase base compensation. A careful analysis of individual company plans, however, reveals that 73% of those planning an increase are planning to raise compensation 5% or less, while only three companies (7%) are planning to raise compensation by 25% or more. At the same time, the number of companies not planning an increase went from 49% in 2009 to 41% in 2010, indicating better economic times.

4 to 5%
32%

*Based on percentage of those planning an increase in 2011

Compensation Plan Change Comparison 2011

Companies planning increase
59%

Companies not planning increase

41%

2010

Companies planning increase

51%

Companies not planning increase

49%

Equity Ownership
Fully Diluted Ownership (Non-Founders Stock)
The study found significant differences in the fully diluted equity ownership (excluding founders stock) among Presidents* and CEOs and other members of the executive suite. On average, Presidents and CEOs were granted 8.33% and 6.80% of fully diluted equity ownership in their firms, while the remainder of the executive team hold equity as follows: CTO 3.77%, Sr. Business Development Executive 1.90%, COO 1.67%, CFO 1.45%, Sr. Sales Executive 1.42%, Sr. Marketing Executive 1.25%, Sr. Engineering/ Development Executive 1.20% and Controller 0.20%.

Fully Diluted Ownership (Including Founders Stock)

When considering the fully diluted equity ownership (including founders stock and all equity grants), the study found significant differences among Presidents and CEOs and other members of the executive suite. Specifically, Presidents* and CEOs had an average of 24.00% and 21.20% of fully diluted equity ownership in their firms.

continues on page 7

Numeric Summary of Compensation Findings

minimum minimum minimum

Annual Salary1 Total Bonus Potential of Base Compensation1 Total Bonus Paid of Total Bonus Potential1
$22,000 $202,500

median median median

mean mean mean

number of responses number of responses number of responses

maximum maximum maximum

70

$221,239
$396,000
55

$450,000

CEO
$0

$0 $25,000

$75,000

$96,101 $202,250
8

$60,542
$125,000 $196,500 $300,000
8

$350,000
52

President
if di erent from CEO $0

$0 $0

$87,500

$97,500
$150,000
9

$225,000

$39,444

$110,000

$201,481 $210,000
$187,500
21 21

$290,000
27

COO

if di erent from CEO and President $0

$0

$54,000

$67,810

$28,000

$43,952
$63,000

$165,000 $165,000

$175,454
34

$300,000
42

CFO

$0 $15,000 $0

$49,000

$60,845
$125,000
32

$191,250

$31,458

Controller

$65,000 $21,140 $22,213 20 $40,000 $6,000 $12,200 $14,253 19 $45,000 $0 $40,000 $30,000

$105,000 $106,771

27

$175,000

$155,000 $157,288

$300,000
42

CTO

$0 $14,500 $0

$49,620 $35,581
$135,500

$300,000
30

$350,000
27

Senior $80,000 Engineering/ $25,700 $26,625 34 $89,000 Development $0 $12,750 $20,587 Executive 30 $80,000 $0
$60,000 Senior Business $0 $40,000 $57,452 Development Executive $10,000 $27,544 $0

$141,627

$275,000
46

$150,000

$157,774
$200,000
31 26

$250,000
31

$200,000

Senior Sales Executive

$0

$0 $26,000

$84,000 $60,000 $66,077

$148,622 $150,000
$200,000
41

$254,000
54

$79,776 $32,761
22

$1,350,000
37

Senior Marketing Executive Independent Director

$0 $5,500 $0

$30,000

$75,000

$135,000$135,964 $135,000
23

$270,000
28

$14,260

$61,000

$5,000 $49,500

$76,244

$237,952
8

$0 $0

$16,210
3

$59,488 $59,488 $59,488 $59,488 1 respondent $48,631

1 Averages reflect results from those companies reporting

Numeric Summary of Equity Ownership and Stock Option Findings

minimum minimum minimum 0.50% 0.00% 0.00%

Non-Founders Equity Ownership2 Including Founders Equity Ownership2 Percent of Option Pool3
5.00%

median median median

mean mean mean

number of responses number of responses number of responses

maximum maximum maximum

6.80% 21.20%
26.00% 26.12%

33

40.50%

CEO

10.00%

100.00%
55

100.00%
28

President
if di erent from CEO

5.00% 8.33% 3.00% 3 17.00% 24.00% 10.00% 2.00% 27.33% 22.00% 10.00%

7 3

71.00%

50.00%

1.50% 1.67% 3.00% 15 respondents 0.40% COO 3.00% 4.71% if di erent from 15 20.00% 0.40% CEO and President 12.80% 13.09% 10 20.00% 3.00% 1.00% 1.45% 31 7.00% 0.10% 1.14% 1.85% 30 10.00% 0.10% 6.10% 7.52% 27 20.00% 1.06% 0.10% 0.20% 0.00% 0.50% 11 respondents 0.26% 0.60% 0.10% 8 3.00% 0.79% 1.12% 0.11% 8 3.00% 1.00% 3.77% 0.05% 10.10% 3.75% 0.05% 4.55% 6.52% 18 20.00% 0.05% 0.50% 1.20% 25 8.00% 0.10% 0.82% 2.16% 22 10.00% 0.10% 3.85% 4.09% 14 14.00% 0.83% 1.00% 1.90% 20 12.50% 0.00% 4.00% 4.83% 17 12.50% 0.50% 10.00% 10.94% 2.30%
28 9.50% 0.05% 1.20%2.05% 25 10.00% 0.20% 10.00% 10.60% 0.96% 21 28

CFO

Controller

40.50%

CTO Senior Engineering/ Development Executive Senior Business Development Executive Senior Sales Executive Senior Marketing Executive Independent Director

40.50%

12

25.00%

1.00%1.42%

23

60.00%

1.00%1.25% 15 7.00% 0.00% $1.00% 2.41% 13 17.00% 0.05% 2.30% 3.11% 7 7.10% 0.05% 1.00% 1.79% 13 6.50% 0.01% 1.21% 1.00% 13 6.50% 0.01% 3.00% 3.30% 8 5.10% 0.86%

2 Fully diluted 3 Percent of option pool measures the portion of the total available option pool allocated to the title

Founder Equity Ownership (2010 vs 2009) 2010

Average percent equity ownership
49%

40% percent of founders owned 50% or more

2009

Average percent equity ownership

42%

49% percent of founders owned 50% or more

Overall Stock Option Pool Comparison (Percentage Allocated to Each Title)

CEO President COO CFO Controller CTO Senior Engineering/Devt Executive Senior Business Devt Executive Senior Sales Executive Senior Marketing Executive Independent Director

26.12% 12.85% 27.33% 6.00% 13.09% 10.18% 7.52% 5.64% 1.12% 0.80% 6.52% 4.16% 4.09% 3.73% 10.94% 4.95% 10.60% 4.71% 3.11% 3.10% 3.00% 3.55%
5% 10% 15% Percent stock option pool in:

2010 2009
30%

0%

20%

25%

continued from page 3 The remainder of the executive team holds equity as follows: CTO 10.10%, the Senior Business Development Executive 4.83%, COO 4.71%, the Senior Marketing Executive 2.41%, the Senior Engineering/Development Executive 2.16%, the Senior Sales Executive 2.05%, CFO 1.85% and Controller 0.60%. * Note: For ownership percentage, a relatively small number of respondents actually identified an executive holding a separate President title, so ownership information related to company Presidents is skewed by a few high percentages within these low number of responses.

2010 Option Price Actions

Did re-price
5%

Did not re-price

95%

Founder Ownership
Across all companies surveyed, equity ownership by company founders averaged 49%, with 49% of company founders still owning 50% or more of the firms they founded. This is an increase of 7% from 2009, where equity ownership by company founders averaged 42%, with 40% of company founders still owning 50% or more of the firms they founded. This increase of equity ownership suggests that valuations are getting better and less dilution is occurring.

Other Benefits
Change of Control
At 68%, the majority of executives surveyed did not have a change of control plan that will pay cash bonuses to designated executives on a change of control such as a sale of the company. Only 32% of participants had a change of control plan.

Stock Options
Overall Stock Option Pool
Presidents currently hold the largest percentage of the overall total stock option pool at 27.33%, followed by CEOs at 26.12%, COOs at 13.09%, Sr. Business Development Executives at 10.94%, Sr. Sales Executives at 10.60%, CFOs at 7.52%, CTO at 6.52%, Sr. Engineering/Development Executive at 4.09%, Sr. Marketing Executives at 3.11%, Independent Directors at 3.00% and Controllers at 1.12%. Again, its worth pointing out that a relatively small number of respondents actually identified an executive holding a separate President title, so overall stock option pool information related to company Presidents is skewed by a few high percentages within these low number of responses.

Executive Benefits
In addition to base salaries and bonuses, many companies in the survey offered additional benefits to executives. Mobile phones/PDAs (57%) and employment contracts (46%) where the most reported benefits offered, followed by laptops/homes PCs (34%) and supplemental life or disability insurance not offered to non-executive employees (25%).

2010 Change of Control Plan

Re-Pricing of Options
During 2010, only 5% of firms surveyed re-priced stock options to lower the exercise price from the original offering price. This is down from 2009 when 11% of companies repriced stock options. Concurrently, option price reductions, when taken, were significant the average option price was lowered 60%. Compare this to 2009, when the average option price was lowered 64%. This years results show the influence of the rebounding stock market on the need to reprice and by how much.

Have Do not have

a change of control plan 68%

a change of control plan 32%

2010 Executive Bene ts and Perks

Mobile phones/PDAs Employment contracts Laptops/home PCs Supplemental life or disability* Richer bene t plan* Airline club membership Company cars/allowance Educational reimbursements Reserved parking Financial counseling Tax gross-ups 4% 0% 10% 20% 30% 40% 50% 60% 12% 12% 9% 20% 18% 16% 25% 34% 46% 57%

* Not o ered to non-executive employees

Other executive benefits identified by participants included richer benefit plans than non-executive employees (20%), airline club memberships (18%), company cars/allowances (16%), educational reimbursements (12%), reserved parking (12%), financial counseling (9%) and tax gross-ups (4%).

2010 Executive Health Bene ts Employer Contribution

Health Benefit Premiums

More than half (50.5%) of the companies surveyed contributed at least 75% or more to the executives health benefits premium not including spouse and dependents. Thirty-two point five percent (32.5%) of companies contribute between 50% and 74% of the executives health benefits premium, while only 17% contribute less than 50% of the executives premium.

below 50% 91 to 100%

32% 17%

50 to 59%
14%

75 to 90% 60 to 74%
18.5% 18.5%

About Technology Executives Roundtable

Technology Executives Roundtable (TER) is an association for Georgia technology executives that provides CEOs, CFOs and general managers with the ability to maximize the value of companies through the exchange of top ideas, candid talk and a forum to share what is working, what is not and best practices to unlock business value. Monthly meetings feature speakers and panels of local and national experts covering topics such as strategic alliances, crisis management, non-conventional financing, M&A, intellectual property protection and other issues of interest to senior executives on

company growth. For more information, visit www.ter-atlanta.com.