U.S. buyout and growth equity shops offer generous benefits up and down their ranks in an unending race to attract talented people.
Every single junior executive participating in our compensation study this year, for example, said they participated in an annual bonus program. The same goes for 96 percent of the mid-level executives and 75 percent of the senior executives. In our survey we consider analysts and associates to be junior executives; senior associates, VPs, principals and directors to be mid-level executives; and partners, managing directors, managing partners, CFOs and COOs to be senior executives.
The Report: These are among the findings of the third edition of our Guide to PE Compensation, published this month and based on a survey of 213 PE professionals conducted this spring and summer. The survey covers salaries, bonuses, carried interest and other benefits earned by PE professionals working at small US buyout and growth equity firms with $500 million or less in AUM; medium-sized firms with $500 million to $1 billion in AUM; large firms with $1 billion to $2.5 billion in AUM; and mega-firms with $2.5 billion or more in AUM.
- Carried Interest: Surely carried interest—the slice of profits doled out to eligible PE professionals—is the most sought-after benefit. Years ago the benefit went largely to senior executives. But over time carried interest has spread down the ranks, to the point where in this year’s survey we found 74 percent of mid-level executives participating in a carried interest plan. The percentage is 85 percent for senior executives and 20 percent for junior executives. Mid-level executives have a median of $2 million of carried interest at work across all of the funds at their firm, while for senior executives the median is just under $6 million. Carried interest at work can be thought of as the amount of money a professional would earn should a firm double the value of its committed capital.
- Co-investment Programs: The ability to participate in a co-investment program is another valuable benefit offer by many firms. In this year’s survey, 30 percent of junior executives reported participating in a co-investment program, 46 percent of mid-level executives, and 25 percent of senior executives.
To access all the data in our third edition Guide to PE Compensation make sure to sign up for a Gold or Talent Pro membership to PrivateEquityCareer.com.