Private Equity Compensation Report 2010

Note on the Private Equity and VC Compensation Report

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Executive Summary

This year’s report includes actual data from 2008 plus projected compensation numbers for 2009. As we collected the data in October and November of 2009 and did not see significant market events since that time, we feel comfortable presenting the 2009 numbers as final.

The report addresses issues such as compensation earned, fund performance, carried interest, work satisfaction and much more. The survey also aims to understand how these professionals perceive their work and what they expect from their employers. Note that the figures in this report are only based on data collected directly from private equity and VC professionals.

Again this year, private equity professionals reported an increase in total earnings over the previous year. As 2009 wrapped up, the average expected compensation increase was 2.5 percent over last year – not the double digit increases seen in the past.

Decreased firm performance, increased scrutiny from limited partners of compensation policies and increased competition for jobs are all impacting base compensation levels.

Overall, we saw small but positive movement in 2008 to 2009 earnings and, despite industry rumblings about base salary freezes earlier in the year, the majority of that movement came in the form of increases in base compensation.

Some of the highlights from this year’s report include:

• The annual average compensation for private equity and VC professionals was $208,000 USD with an average 3.5 weeks of vacation benefit.
• An increase in dissatisfaction with pay that signals a stronger market.
• Although usually an advantage, an MBA doesn’t guarantee better compensation, especially for those with 5 years or more of work experience.
• Venture capital firms tend to pay less for comparable positions in “pure play” private equity firms.
• This year VC firms led the way in terms of increases in base compensation, which led to highest satisfaction rating among all firm types.

• The difference between the UK and US in terms of compensation and overall work and personal life balance is negligible.

The report should help job seekers better manage their pay expectations and fund managers establish compensation package benchmarks.

Methodology

Private Equity Jobs Digest surveyed hundreds of partners, principals and employees during October and November 2009 to benchmark compensation practices. Respondents were from the across the globe, with a concentration in North America, and include some of the largest and most recognized private equity and venture capital firms.

Some of the participating firms include: 3i, Actis, American Capital, Babson Capital Management, Bain Capital, BlackRock, Deutsche Bank, EDC Equity, EdgeStone Capital Partners, Highland Capital Partners, Kaiser Permanente Ventures, North Atlantic Capital, RBS, Safeguard Scientifics, and Time Warner Investments.

Links to Further Analysis:
Pay Levels
Differences Between Firm Types and Fund Size
Hours Worked and Compensation
Job Security and Balance
Carried Interest
Education and Experience
Pay Satisfaction