The annual Private Equity Jobs Digest Compensation Reports are based on surveys designed to capture valuable compensation information directly from those directly involved in private equity and venture capital. Over the years, we have surveyed many partners, principals, vice presidents, associates and others from investment firms, both large and small.
The complete report is sold on www.PrivateEquityCompensation.com and a complimentary version of the report is available to our Premium Members for no additional cost.
Here we summarize the results of the current private equity compensation survey to include some of the earnings data and other findings. The report addresses issues such as the compensation earned by professionals and their work satisfaction. The report also reveal how these professionals perceive their work and what they expect from their employers.
Private equity, venture capital (and hybrid) firms face new challenges even as they strive to overcome existing headwinds. These new challenges include carried interest, data management, environment and social governance and pre-existing issues such as transparency, fund structure, fund raising and market conditions.
However important these issues may be for the future of the private equity and venture capital industry, the goal of this report is to quantify, to the extent possible, how industry trends affect compensation in the industry.
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.
One challenge the industry continues to see is the call for greater transparency and value for management fees. In the end, longer term performance will determine if a firm can continue to charge higher fees and, thus retain the best alternative investment talent. We’ve seen a trend of stronger correlations between fund performance and individual performance.