Private Equity Compensation 2023

Dec 5, 2022 | private equity compensation

2023 Private Equity Compensation Report Shows Increased Compensation Despite Slowing Fund Performance

Private Equity Compensation Report

ANN ARBOR, MI, December 7, 2022 – The 2023 Private Equity and Venture Capital Compensation Report marks the ninth straight year of compensation gains in the private equity and venture capital industry.

Despite a downturn in the stock market, corporate layoffs, and discussions of recession, participants across the board reported higher total earnings over the previous year. Overall, 65 percent of respondents expect to see greater cash earnings this year.

Those earning from $151,000 to $1 million increased another 3 percent and now account for 87 percent of respondents. This is the highest percentage of private equity and venture capital professionals reporting earnings of more than $150,000 in annual compensation in the history of this report.

“As we saw last year, most of these professionals are unhappy with their private equity compensation packages,” said David Kochanek, Publisher of PrivateEquityCompensation.com. “Market conditions and employee expectations were the two biggest reasons cited for their dissatisfaction.” Carried interest and compensation formulas were the remaining reasons for dissatisfaction.

Estimated fund performance in 2022 is down compared to last year. Funds up 25 percent or more fell by 4 percent. Funds up 10 to 24 percent dropped from 45 percent last year to 39 percent. And the percentage of respondents who said their fund’s performance was down increased from 4 to 8 percent. Given the state of the economy, we expect this trend to continue in 2023.

Bonus pay is usually based on several factors, including firm performance, fund performance, and individual performance. As reported in previous reports, this year, when funds didn’t perform well, professionals expected their firm to pay out lucrative bonuses to team members.

The most popular month for bonus payouts is December, accounting for 26 percent of responses. December is followed by the first three months of the year, in which 49 percent of respondents report receiving their bonus payouts.

In-house training continues to receive unfavorable reviews, with nearly half of respondents reporting non-existent or weak internal training programs. Equivalent to last year, only 18 percent rate their in-house training as good to excellent despite the benefits firms could gain in recruitment and retention by strengthening this area.

In addition to compensation data, the 2023 Private Equity and Venture Capital Compensation Report provides additional insights such as positions in demand, percentage of firms hiring, where firms are cutting back, and where career opportunities are increasing.

About The Report

The 2023 Private Equity and Venture Capital Compensation Report is based on data collected directly from hundreds of private equity and venture capital partners, principals, and employees.

The report, in its sixteenth year of publication, is widely regarded to be among the most comprehensive benchmarks for private equity and venture capital compensation. It provides independent and impartial data covering a broad range of salary, bonus, carried interest, and other compensation-related information, sourced directly from professionals working within the industry.

 

Private Equity Compensation 2022

Dec 19, 2021 | private equity compensation

2022 Private Equity Compensation Report Shows Continued Upward Trends in Compensation

Private Equity Compensation Report

ANN ARBOR, MI – The 2022 Private Equity and Venture Capital Compensation Report shows that private equity and venture capital compensation is up again this year, marking the eighth straight year of compensation gains.

The percentage of respondents earning $150,000 and below has continued to decline and those earning from $151,000 to $1 million increased to 80 percent of respondents. This is the highest percentage of private equity and venture capital professionals reporting earnings more than $150,000 in annual compensation in the history of this report.

“Overall, compensation is up, yet 57 percent of those surveyed are dissatisfied with their pay,” said David Kochanek, Publisher of PrivateEquityCompensation.com. “We’ve seen this before. When the market is strong, pay satisfaction is weak. This is because investment professionals are not currently concerned about losing their job and they are reading about the top performers and huge pay packages.” Market conditions and employee expectations are the reasons cited by 62 percent of those dissatisfied.

Estimated fund performance in 2021 was up compared to 2020, and funds up 10 to 24 percent over last year represented the majority at 45 percent.
The research shows that bonus pay is typically calculated based on firm performance, fund performance, individual performance and a combination of factors. The largest bonus payouts are achieved in the largest firms based on individual performance. In fact, employees at the largest firms can expect to earn more than triple the bonus pay of those at smaller firms.

In addition to compensation data, the 2022 Private Equity and Venture Capital Compensation Report provides additional insights such as positions in demand, percentage of firms hiring, where firms are cutting back and where career opportunities are increasing.

About The Report

The 2022 Private Equity and Venture Capital Compensation Report is based on data collected directly from hundreds of private equity and venture capital partners, principals and employees.

The report, in its fifteenth year of publication, is widely regarded to be among the most comprehensive benchmarks for private equity and venture capital compensation. It provides independent and impartial data covering a broad range of salary, bonus, carried interest and other compensation-related information, sourced directly from professionals working within the industry.

 

Private Equity Compensation 2021

Apr 26, 2021 | private equity compensation

Continued Upward Trend in Compensation Despite COVID-19 Pandemic

Private Equity Compensation Report

ANN ARBOR, MI, April 27, 2020 — The 2021 Private Equity and Venture Capital Compensation Report shows that private equity and venture capital compensation is up again this year, marking the seventh straight year of compensation gains. The year was unprecedented with the COVID-19 pandemic, and many respondents noted concerns about fundraising and job security in this environment.

The percentage of respondents earning less than $150,000 was down again and those earning from $150,000 to $1 million increased to 68 percent of respondents. This represents the highest percentage of private equity and venture capital professionals reporting earnings more than $150,000 in annual compensation in the history of this report.

“Overall, compensation is up, but more than half of those surveyed are dissatisfied with their pay,” said David Kochanek, Publisher of PrivateEquityCompensation.com. Market conditions and employee expectations are the reasons cited by 60 percent of those dissatisfied.

Bonus pay in the highest pay band has been declining as a percentage share of total compensation since 2014. In fact, bonus pay went down for most respondents compared to last year. However, employees at the largest firms can expect to earn more than double the bonus pay of those at smaller firms.

The research shows that private equity bonus pay is typically calculated based on a combination of several factors: firm performance, fund performance, and individual performance. The highest percentage of firms use a combination of factors but the largest bonus payouts are achieved in the largest firms based on firm performance.

For private equity job seekers, the 2021 Private Equity and Venture Capital Compensation Report provides additional detail such as positions in demand, percentage of firms hiring, where firms are cutting back and where career opportunities are increasing.

About The Report

The 2021 Private Equity and Venture Capital Compensation Report is based on data collected directly from hundreds of private equity and venture capital partners, principals and employees.

The report, in its fourteenth year of publication, is widely regarded to be among the most comprehensive benchmarks for private equity and venture capital compensation. It provides independent and impartial data covering a broad range of salary, bonus, carried interest and other compensation-related information, sourced directly from professionals working within the industry.

Private Equity Compensation 2019

Dec 15, 2018 | private equity compensation

Private Equity and Venture Capital Compensation Gains Continue

Private Equity Compensation ReportIn this, our twelfth annual Private Equity & Venture Capital Compensation Report for 2019, we look to that past to better confront the challenges of the future. The goal of this report is to identify industry compensation trends and provide insights into their effect on compensation practices, recruitment and retention.

This year marks the fifth straight year of compensation gains in the private equity and venture capital industry, with 64 percent of this year’s respondents expecting total compensation levels to increase over last year, while only 5 percent expect to earn less.

We have noted several trends in this year’s compensation report, one of which is increasing base salaries and declining bonuses as a percentage of overall compensation for private equity and venture capital professionals in the highest pay band.

This year’s report confirms the continuation of another unsettling trend—the diminishing correlation between bonus pay and firm performance. For example, we see that respondents employed in firms where fund performance is down by 1 to 9 percent still forecast an average bonus of $114,000. Seeds of this trend surfaced in 2014, sprouted in 2015, grew in 2016 and matured in 2018.

In-house training continues to receive unfavorable reviews, despite last year’s movement in a positive direction. Why the industry ignores the potential benefits of robust in-house training programs remains a mystery, particularly in the competitive job market that exists today. Quality internal training programs have the potential to attract and retain talent, but statistics show this potential is broadly ignored, as a mere 17 percent of this year’s respondents rate their in-house training as good to excellent.

Higher MBA base salary, bonus compensation, and vacation time as compared to their non-MBA peers has been a regular feature of this report since its inception. This year, we can once again, confirm the monetary value of an advanced degree.

Job seekers will appreciate the section of this report devoted to identifying which positions are in demand, what percentage of firms are hiring, and what percentage are cutting back. For example, 54 percent of respondents’ firms are hiring investment personnel, while only 1 percent are cutting back in information technology hires.

The 2019 Private Equity and Venture Capital Compensation Report serves as myth-buster and forecaster, debunking misconceptions, and providing readers insightful, industry-specific information regarding the complex subject of compensation.

Other highlights from this year’s report include:

  • Respondents working in firms with less than $100 million in assets under management (AUM) earn almost 13 percent less than peers in firms with $1 billion or more;
  • 73 percent of respondents do not receive a bonus guarantee;
  • The least-favored investment strategy is PIPE;
  • Bonus pay totals 44 percent of all compensation paid to industry professionals; and
  • Fifty-two percent of respondents work in firms with expected fund gains of 10 to 24 percent.

About The Private Equity Compensation Report

The 2018 Private Equity and Venture Capital Compensation Report is based on data collected directly from hundreds of private equity and venture capital partners, principals and employees.

The report, in its eleventh year of publication, is widely regarded to be among the most comprehensive benchmarks for private equity and venture capital compensation. It provides independent and impartial data covering a broad range of salary, bonus, carried interest and other compensation related information, sourced directly from professionals working within the industry.

Private Equity Compensation Report 2018

Dec 17, 2017 | Press

Continued Demand for Investment Talent is Driving New Levels of Compensation

private equity compensation 2018The 2018 Private Equity Compensation Report, shows that increased fund raising and billions in funds looking for investments has resulted again this year in increased private equity and venture capital compensation.

Sixty-five percent of professionals reported an increase in cash earnings this year. The average reported cash compensation for private equity and venture capital professionals is $315,000 USD, another increase from the previous year. Private equity and venture capital professionals working in the largest firms continue to out-earn their peers in smaller firms.

North American dry powder levels are now measured in the hundreds of billions of dollars. The report reveals increased demand for investment talent again this year. “We predicted this trend several years ago based on private equity professionals reporting increases in both base and bonus, despite their funds not producing outstanding returns,” said David Kochanek, Publisher of PrivateEquityCompensation.com

The correlation between bonus pay and firm performance continues to diminish. In 2017, it became apparent that the absence of close correlation is the new normal. In this 2018 report, we see that respondents employed in firms whose performance is down by 1 to 9 percent still forecast an average bonus of $161,000.

For private equity job seekers, the Private Equity Compensation Report for 2018 reveals which positions are in demand, what percentage of firms are hiring, and where firms are cutting back – and the career opportunities are increasing across the board. For example, 25 percent of respondents’ firms are hiring in the back office for accounting personnel and 27 percent said they are hiring in operations and portfolio management.

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, including some principals, managing directors and senior analysts.

Firms would be wise to tune into their team’s thoughts on compensation levels right now. “Often times, the first indication of a problem is when the employee turns in their 2-week notice and is headed out to join another firm,” Kochanek warns.

About The Report

The 2018 Private Equity and Venture Capital Compensation Report is based on data collected directly from hundreds of private equity and venture capital partners, principals and employees.

The report, in its eleventh year of publication, is widely regarded to be among the most comprehensive benchmarks for private equity and venture capital compensation. It provides independent and impartial data covering a broad range of salary, bonus, carried interest and other compensation related information, sourced directly from professionals working within the industry.