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Compensation represents the core of the survey and the most asked about part of an employment package, so it’s fitting to start the discussion with this topic. The respondents indicated their cash compensation is pretty healthy overall.
The average total cash compensation is $224,000. 41 percent earn $100,000 – $200,000 and 21 percent earn more than $300,000. Just 2 percent of the respondents’ cash compensation was above $1 million with an average base salary of about $685,000.
Apart from base compensation, professionals are also given bonus packages based on their performance. Pay-for-performance is a well known standard in private equity and venture capital. The results clearly show the more the money earned, the more one relies on the bonus. As the graph below depicts, the bonus percentage increases with each earnings range.
Respondents with a total compensation of more than $1 million received, on an average, a bonus of 45 percent (or about $500,000). For those earning $150,000 to $300,000 in total compensation, the bonus percentage drops to 32 percent.
This level of compensation is not surprising given the amount of experience the respondents bring to the firm. Categorizing the respondents on the total work experience that they have, it is found that nearly half the respondents have a solid 10+ years of experience and 69 percent have more than 7 years of experience.
The compensation progression clearly follows the career path. The survey shows that, on average, the compensation of associates and senior associates is less than 40 percent of what a managing director makes and about 65 percent of what a principal in the firm makes. Also the most senior team members realize 35 percent higher bonus percentages on average.
The real money starts at the Principal level and is found to nearly double at the Managing Director level. A surprising factor is that Associates earn nearly as much as Senior Associates. This may be an indication of the high demand for talent in the market even at the lower levels or a byproduct of varying responsibilities by title between firms.
back to 2007 Private Equity and VC Compensation Report
