Pay for private equity managers is “largely unchanged” amid the economic fallout of the coronavirus pandemic, according to recruiter Heidrick & Struggles.
In fact, 57 percent of the private equity investment professionals surveyed by the firm reported that their salaries went up this year — roughly in line with the 57.5 percent who received raises in 2019.
Just 1 percent said their base pay declined.
Still, it remains to be seen what total compensation will look like for private equity managers this year, given that bonuses are typically not paid until December. Variable compensation generally accounts for at least half of total pay, and potentially much more than that at the most senior levels, Heidrick & Struggles data show. Last year, for example, one managing partner reported earning a bonus that was six times higher than their base salary.
According to the Heidrick & Struggles survey, 71 percent of private equity investment professionals have a discretionary bonus plan, versus 15 percent whose bonuses are determined by a formula. Among the discretionary bonus crowd, 63 percent said variable compensation was “entirely discretionary,” while 25 percent said it was based on individual performance. Others were paid based on firm performance or team performance.
The recruiting firm surveyed a total of 785 private equity investment professionals based in North America. Among the 450 or so who reported an increase in base pay this year, 40 percent said their salary grew by 10 percent or less. Around a third received a raise of 11 to 20 percent, while 23 percent saw their base compensation go up by 21 to 50 percent.
Last year, average cash compensation — including bonuses — ranged from $1.1 million to $3.7 million for managing partners at private equity firms with less than $20 billion in assets under management. A single managing partner, employed at a firm with more than $20 billion in assets, reported earning $21 million in total compensation.
For partners and managing directors, meanwhile, total average pay ran from $596,000 to $2.2 million, depending on the firm’s assets under management. Average compensation for associates and senior associates was less variable across firm sizes, ranging from $193,000 to $315,000.