Why I paid myself 78p instead of £1.7MILLION – and handed £100k to charity
Cyber-security chief explains pay deal that has stunned the City
YOU join a company as an intern, work your way up through the ranks and finally become the boss more than 20 years later. What’s the first thing you do? Buy a superyacht? Private jet? Splash out on a holiday home?
Giving up a multi-million pound pay cheque probably isn’t high on your list. But that’s exactly what Ondrej Vlcek did when he was promoted to chief executive of the £4billion London-listed cyber-security giant Avast in July.
‘It was maybe seven or eight years ago that I first read about how the Silicon Valley CEOs – Larry Page and Eric Schmidt at Google and Elon Musk – did the same thing,’ Vlcek explains.
‘I personally felt very inspired by that, even though I didn’t work for their companies. I thought, “Wow, I wish my CEO did something like that.” So when I became the CEO, I thought it’s kind of my turn.’
In a move which stunned the City, Vlcek (pronounced Vil-check) indefinitely waived a $700,000 salary and potential $1.4million annual bonus and handed a $100,000 boardroom fee to charity. Instead, he will receive a fee of just $1 (78p). He effectively gave up £1.7million a year.
While he was following in the footsteps of the bosses of the major technology companies, it was an unprecedented move for the chief executive of a UK company.
‘It’s very uncommon and a risky step, at least in the UK. It’s unprecedented so it wasn’t quite clear how the board would perceive it. But it got a great reception. And I feel good about it. My ultimate objective is that some of our people get inspired the same way I got inspired eight years ago.’
The 42-year-old, who was born and still lives in the Czech Republic,
where Avast was founded and is still headquartered, is quick to point out that he will still cash in on long-term share schemes if Avast performs well. He also has a 2 per cent stake worth £80million.
But does money not motivate him? ‘The message I’m sending here is not that I don’t care about money. It’s short term versus long term,’ he says.
His move comes at a time when capitalism has come under fire. Companies have been accused of rewarding failure at the top while staff further down the chain pay the ultimate price – as was the case at Thomas Cook.
Vlcek argues it is ‘totally fair’ he only gets long-term incentives because it means he only gets rewarded if the company does well. But he admits not every chief executive can afford to make the same move as they don’t all have a large stake in their businesses.
Having said that, he does think every UK chief executive should ensure their business has a purpose other than just making money. Vlcek believes the ‘purpose’ will inspire employees and drive higher productivity. ‘Businesses in today’s world are not necessarily just about delivering value to shareholders, but [need to] have some other meaning as well. I’m a believer that if you do it right, it really helps, especially in driving productivity.
‘But at the same time, I’m slightly worried that it becomes a box-ticking exercise for many businesses and it loses its meaning.’
He says Avast’s purpose is obvious in that it wants to increase security and privacy. The company now has 435million users of its anti-virus products and controls around 40 per cent of the home computer market outside China, making it a cyber-security heavyweight. But even a furniture company should have a purpose beyond making furniture, he argues.
‘I think it’s healthy for the leaders of the company to think about it and frame it in a way which makes people more proud and more devoted to what they do.’
He gave his $100,000 board fee to Demelza Hospice Care for Children and he and his wife have a charity for sick children of their own in the Czech Republic. His wife is a palliative physician so the cause is close to their heart. The Avast office in Central London, where we meet, is full of reminders of a business focused more on just being a cash machine, with posters advertising charity campaigns around the office.
He tells me one of his Silicon Valley idols, Satya Nadella, also focused on culture at the start of his reign as Microsoft chief executive. ‘It took Satya a little bit of time to define what the business strategy would be. Now, I think they are pushing it in totally the right direction. He focused at the beginning on the culture and I did the same. It does bring fruit.’
Vlcek himself played a role in Microsoft’s growth. Born in Prague, he says he had a ‘nice upbringing’ and felt ‘disconnected’ from the changes happening at the time in the Eastern Bloc. A self-confessed ‘geek’, he learned how to code at an early age before joining Avast in 1995 as an intern, where he developed one of the first anti-virus software programmes for Windows.
Now – after nearly 25 years – he is in charge of the company, which is on the cusp of promotion to the FTSE100, just 18 months after its successful stock market float. It now has a valuation of £4.1billion and made a near-£200million profit last year on revenues of more than £600million. ‘I’m a growth person by nature. My intention is to continue growing the company. Today, I think we are 108th on the list so very close to the FTSE 100. As long as we continue growing then one day we will reach that mark.’
The ‘huge explosion’ in the number of devices connected to the internet is where he sees that growth. He says that it means in a couple of years more than 85 per cent of those devices will be neither computers nor phones. They will be things such as coffee machines, fridges, smart speakers that are all connected to the web.
Whereas previous cyber-security products and anti-virus software were aimed at protecting specific devices, Avast is now focusing on protecting the whole network.
‘There’s this massive ticking bomb that these billions of devices can become a major threat to the entire ecosystem,’ he warns. ‘It only takes one of those devices to be broken then it creates this backdoor into your home.’
That could mean bank details and other personal data being stolen by hackers accessing the network through something as trivial as a coffee machine.
As our interview winds to a close, Vlcek admits that it has been easier to make eye-catching changes to the company culture – and his own pay – while revenues, profits and the share price have all been going up.
But as Avast heads for the bright lights of the FTSE 100, it may not be long before his fatcat rivals come under pressure to follow suit.
The message I’m sending here is not that I don’t care about money, this is about the long-term