Nanogene Case

Topics: Employment, Salary Pages: 3 (1120 words) Published: November 26, 2012
Graciela Rodarte
FIN 425
Professor: Stephan Cutler
November 8, 2012

NanoGene Technologies, Inc.

In November 2001, the team of Tompkins Mark Masterson, Ravi Rhoota, and Gary Gary Garfield met to formally incorporate NanoGene. They discussed a number of important issues including equity splits, salaries, funding strategies, and naming Tompkins CEO. The founders decided a salary of $120,000 and split the equity equally. NanoGene closed a deal with an angel for $600,000, and their own stock would be 20% immediately, 20% at the end of the first year and the remaining 60% at the rate of 2% per month. In September 2002, Tompkins met with VCs seeking $10 million in series A financing. After doing several due diligences on the company, the VCs had serious issues with the decisions the founders had made. First, it was the large founding team, the fact that split the equity equally, the salary, and none of them had experience as a Chief Scientific Officer of an established firm. According to the VCs CEOs usually have 7 to10% equity and makes about $250,000 salary, and senior scientist $95,000. Another issue that the founders had was that they wanted to hire Miller as VP but they were not agree with the salary she was asking. Mean while she agreed to do some consulting projects for NanoGene. Miller did help the team do some hiring process and with the compensation policy. Evaluate the founders’ decisions regarding the split of equity and compensation level. The decision of the split equity, and compensation seemed fair when NanoGene was founded. As the case stated, Will Tompkins did not see himself more important than his co-founders, and because they all started together and were agreed about it. But once the founders started working, things changed as they performed different duties and responsibilities. I t is logic that salaries and compensation should go according to their performance in the company. There exist guidelines to follow on how NanoGene should go...
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