With the start of each New Year, professionals across the private funds industry have compensation on the brain, whether they are reflecting on their year-end bonus or negotiating a pay raise. That’s why each year pfm takes a close look at the compensation levels of various private fund professionals, with the aim of discerning what the going market pay range is for any role – from junior fund accountant to managing director.
In the link below, we present non-public data from the 2015 Investment Firm Survey by compensation consultants J Thelander and research firm PitchBook, compiling responses from approximately 160 private equity firms in 2015 to determine what the average firm pays each member of their staff, in base pay, bonus and carry.
Of course unlike in an industry like investment banking where there are only 15 to 20 firms to assess in order to get a clear picture of compensation trends, it’s more difficult to “get your arms around” pay developments in the private equity space, where several hundred firms are all doing things differently depending on their specific strategy, headcount, or assets under management (AUM), notes Joe Healey, senior client partner at recruitment firm Korn Ferry.
Just as we at pfm are looking to glean more information on compensation trends, firms themselves are also taking a closer look at their pay packages and developing more sophisticated strategies to determine whose bank accounts deserve a bump each year.
“They’re measuring merit more specifically than they have in the past, seeking to discriminate compensation on their teams based on measures of success,” says Healey.
This is especially the case as pressure continues to mount on the formerly standard 2 percent management fee, which has shifted in recent years to closer to 1.5 percent.
“In response to a more competitive market, firms are really thinking about efficiency and looking much more particularly at who’s adding value,” adds Healey.
This might be explain why you’ll see that pay packages across some titles have remained the same, mildly increased, or mildly decreased in comparison to 2014 data.
Subscribers who are interested in further comparing and contrasting this year’s compensation survey with those of years past are invited to visit our archives on www.privatefundscfo.com. For more comprehensive compensation data around a particular private equity profession, readers are encouraged to email Jody Thelander at firstname.lastname@example.org.
Click here to access the survey
, which also includes an interesting look into carry allocations, GP commitments and some other indirect factors that may impact compensation at today’s private investment firms.