The Private Equity Compensation Report for 2016 Uncovers Disconnect Between Fund Performance and Cash Bonuses
Cash increases slow while the demand for private equity talent increases.
SAN DIEGO, CA, January 20, 2016 — The 2016 Private Equity & Venture Capital Compensation Report, released today, shows that slower industry activity is reflecting in private equity and venture capital pay.
Although 65 percent of professionals reported an increase in expected salaries and bonuses, the growth in cash compensation has slowed. This year’s average compensation for private equity and venture capital professionals was $272,000 USD, a slight decrease from last year.
This marks the second consecutive year of diminished correlation between bonus pay and firm performance. Respondents working in firms that were down 10 percent or more, report anticipated bonuses averaging $43,000 USD. This disconnect continued to surface in firms down 1 to 9 percent, with these survey participants expecting bonuses to average $94,000. In contrast, respondents working in firms that realized gains between 1 to 9 percent were expecting an average $91,000 in bonus pay, $3,000 less than their counterparts in firms that were down by the same range.
The private equity job market, however, continues to shine. “Funds are looking to put their capital to work, that means deal sourcing talent is at a premium,” said David Kochanek, Publisher of PrivateEquityCompensation.com. This year’s report reveals that 45 percent of firms are looking to hire additional investment professionals.
Says Kochanek, “With all the dry powder firms are sitting on, we were not surprised to see increased demand for investment talent again this year. Further, based on the expensive multiples seen in recent strategic exits, we won’t be surprised to see demand increase over the next 12 months for professionals with deep due diligence experience.”
As seen in prior years, when the demand for talent is high, the level of satisfaction with overall compensation is low. Again this year, more than half of respondents described their compensation as unsatisfactory.
About The Report
The 2016 Private Equity and Venture Capital Compensation Report is based on data collected from hundreds of private equity and venture capital partners, principals and employees through direct surveys. The report, in its ninth year of publication, is widely regarded to be among the most comprehensive benchmarks for private equity and venture capital compensation. It opens the door to trusted, independent and impartial data covering a broad range of salary, bonus, carried interest and other compensation related information, sourced from respondents working within the industry.
Some of the participating firms over the years include: Alpinvest Partners, American Capital, Battery Ventures, BlackRock, Carlyle, Century Capital Management, Cerberus, Comcast Ventures, DuPont Capital Management, EdgeStone Capital Partners, GE, Guggenheim Partners, Highland Capital Partners, Hilco Consumer Capital, Intel Capital, Mission Ventures, Mohr Davidow, North Atlantic Capital, RBC Capital Partners, RBS, Safeguard Scientifics, SV Life Sciences, Siemens Venture Capital, TPG, Venrock, and Warburg Pincus.