Stories of the year: Q1

Just what does it take to hire a CFO? That was a subject that dominated the pfm news agenda in the first quarter as back offices continued to grow.

More than one-third of respondents to pfm and EisnerAmper’s CFO survey said they plan to further boost their back-office headcount in 2018, with tax, compliance and accounting skills particularly sought after. Attracting the right CFO has a lot to do with compensation – meaning base salary, bonus and carry – with the ability to climb the corporate ladder being another crucial factor.

Carlyle CFO moves on

In further CFO news, The Carlyle Group lost the CFO of their private equity division, Thomas Mayrhofer, who was with the company for 18 years. He left for a role as deputy chief operating officer and deputy CFO at alternative asset manager EJF Capital, which he started in April. Norma Kuntz, a managing director and the global head of fund management, took over for Mayrhofer. She has been with Carlyle since 2011.

TPG fined by the SEC

In the regulatory world, the Securities and Exchange Commission made their presence felt during the first quarter. TPG Partners was fined $12.8 million by the SEC for taking accelerated monitoring fees arising from the sale, IPO and exit of portfolio companies.

The firm, which is one of the largest global private fund managers, allegedly failed to disclose the accelerated fees before LPs committed capital and failed to submit the accelerated fees to the LP committee for approval.

The SEC also alleged the firm engaged in undisclosed conflicts of interest and failed to implement an adequate compliance program.

US salaries revealed

The first quarter also highlighted some interesting statistics about how private equity firms compensated their employees in 2017.

Fresh talent attracted the highest rise in base salary, which mirrored the trend seen in Europe. US-based associates and senior associates had a 14 percent raise, with the average salary being $125,000, according to data from executive search firm, Heidrick & Struggles.

This was slightly higher than the increase in Europe, which was 13.5 percent. Further up the ranks, vice-presidents experienced a 13 percent raise up to around $198,000. Demand for investment professionals rose to its highest since 2007.

While new hires or employees with a few years’ experience saw big rises, there were smaller increases for more senior executives. US-based principals, who saw the largest increase in compensation between 2015-16, were given a smaller 6 percent increase.

Becoming a Blackstone partner

How to get a top job was the subject of the first quarter’s fifth most read story, which covered the process of becoming a partner at Blackstone.

In January, three managing directors – Wesley LePatner and Jacob Werner in New York, and Samir Amichi in London – moved up to partner and senior managing director, bringing the real estate team’s partner count to 29 out of 450 employees globally.

The formal procedure officially begins in the fall, when the firm’s partners write a summary of a particular professional’s performance and why he or she deserves a promotion, part of an employee-wide talent review process in October and November.

Blackstone’s management committee reviews recommendations for all promotions, including partner. Considerations for the role include commercial contributions, which, depending on the position, is not limited to deal sourcing. The firm also evaluates leadership, both vertically and laterally, and also one’s good business judgment.