Why this FTSE 250 CEO has forgone his salary

Avast boss Ondrej Vlcek joined the company as an intern. Now as CEO, he's only getting paid $1 a year.

by Stephen Jones
Last Updated: 16 Sep 2019
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"Sting would be pretty cool to share a glass with, he set up his own vineyard in Tuscany." 

Ondrej Vlcek is taking a moment out from talking about his new role as CEO of FTSE 250 antivirus firm Avast to indulge his other passion, Italian fine wines.  

Perhaps Sting needs virus protection too? 

"Maybe," muses Vlcek, but here he is more noncommittal. Perhaps he knows that even if he did have the chance to sell cybersecurity to new wave rock stars over a glass of Sangiovese, he’d probably be wasting his time. Sting is most likely already a customer. 

The Prague-headquartered group, which includes fellow Czech cybersecurity brand AVG, claims it has software installed on 35 per cent of the world’s PCs outside of China, with 435 million active users across 59 countries.

Like any good wine, it seems Avast has improved with age. It was founded as ALWIL in 1988 when two Czech computer coders defeated the Vienna computer virus, and for two decades was a local player serving government enterprises and larger businesses in former Czechoslovakia and Poland. 

The "inflection point" came in 2009, when Vincent Steckler joined as CEO. His strategy focused on acquisitions and building a freemium business model, called Platform (Avast offers free downloads of its software, then sells users upgrades or packages), appealing primarily to the home rather than business customer. It saw sales grow from $20m to $800m over the following decade.

Last year Avast entered the London Stock Exchange in a £2.4bn IPO, which made it one of  Europe’s biggest tech listings.

From backroom to boardroom

When Management Today meets Vlcek, at Avast’s nerf-pellet-peppered Holborn Hill office, the 42-year-old Czech computer coder is in the middle of a three-day visit from the firm’s Prague HQ. 

Polite and bespectacled, in a casual blue shirt tucked into jeans, he looks every bit like a man who can code in several languages (he can) and carries an air that suggests he is still coming to terms with the prospect of being responsible for 1,800 employees in 27 offices around the globe.  

It’s a long way from where he started in 1995, as an intern in a business that had just seven people. While his intern partner (with whom he is still in touch) would leave to pursue a career as a theoretical physicist, Vlcek would go from developer to COO, CTO, and president of the firm’s consumer business before finally becoming CEO in July 2019. 

Having worked closely with Steckler, he knew that he might be being considered as a future CEO for years before, but only found out for definite 10 days before Steckler announced he was stepping down in early 2019, after overseeing the IPO process. 

Whereas some bosses Management Today knows have described going public as "a chain around the neck" or "the last thing they would do", given the structural and cultural changes it can bring to the business, Vlcek says that hasn’t been the case with Avast. 

The company already had the executive structure in place for the last seven years, including independent directors, and its two private equity directors demanded that the company report on a quarterly basis. If anything, he says, the process helps you clean up the things that may normally get neglected, like internal IT systems and access controls. 

"Yes you spend a lot of money and it takes a lot of work to get organised, but if you ask our employees, most of them wouldn't even know that anything has changed."

Something that has changed is Vlcek’s approach to executive pay.

His first move as CEO - aside from a global tour of all of the company’s major offices to familiarise himself with the team - was to forgo his six-figure salary.

He takes home $1 a year, and his $100,000 boardroom fee is paid directly to charity. Vlcek says it was a decision he took some 10 years ago after reading about Silicon Valley bosses who earned a dollar a year.

"Personally I was pretty moved by that. I loved it and I told myself ‘I wish my CEO did that. Maybe one day, I will’. 

"I think all of us want to work for a company whose primary objective is not just to generate revenue. And if the CEO sends this pretty strong signal that I'm not just doing this job for a salary, but for many reasons - I think it's quite powerful." 

That’s easy to say when your two per cent stake is worth around $60 million. So is it just good PR?

"I love the idea of the American dream, that it is totally fair that the top people in the company, including the CEO, benefit if it works out really well. I love the alignment and that mindset that if this company grows tenfold then my wealth grows tenfold, I think that's very fair. If it doesn't work out and they end up with nothing, that’s also fair." 

That hasn’t been a problem so far. According to the company’s latest full year accounts, adjusted revenue was $811.5m, with a total net income of $270.8m. 

Vlcek believes Avast’s freemium model has helped it stand apart from long-term cybersecurity rivals McAfee and Symantec in a market predicted to grow to over $248bn by 2023. 

It appears the lurking threat of Russian hackers is good for business, and it’s a threat Vlcek says is only going to increase as the Internet of Things continues to develop.

"I get really nervous when I see the number of devices that are now being connected to the internet. Most of those devices are just broken when it comes to security," says Vlcek. 

"The industries that are behind these devices are not traditional software or security companies. There is huge time-to-market pressure and no regulation, it’s not a good situation. This is creating serious underpinning for the next generation of attacks that will be far bigger than before."

Bad news for most companies, but with the core markets for the Internet of Things predicted to reach $520bn by 2021, it’s unlikely business will slow down for cybersecurity giants like Avast, which has been working with regulators and manufacturers for some years to address the problem.  

If that’s the case, one imagines that Vlcek will have plenty to toast about, whether he gets paid a salary or not. 

Keep an eye out for the next instalment of Management Today’s interview with Vlcek, which will follow in the coming weeks.


Image credit: Avast PLC

 

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