2010 PRIVATE EQUITY COMPENSATION REPORT: A Must-Read for PE Aspirants

Glocap Search, one of the preeminent retained executive search firm focused on the private equity industry, has released a new 2010 report on the Private Equity sector. You'll remember Glocap, and their Senior Partner and head of their private equity practice, Brian Korb, as a guest on our show about "Finance/Banking Salaries in the Current Economic Environment". Below are their highlights from this year's report. If you want to buy the whole report (a steal at $2195.00!) see link at the end.


Glocap Search LLC and Thomson Reuters have released the 2010 Private Equity Compensation Report, an in-depth analysis of 2009/10 compensation at U.S.-based private equity funds. Following several consecutive years in which compensation had been on an upward trajectory, growth across all segments of the market (buyout/growth equity, venture capital and private equity fund of funds) has come
to a halt with total compensation now trending down, according to the report.
Much of the pullback in compensation can be attributed to a drop-off in fee income from slower deal activity and dramatically reduced fundraising. This is an about-face from the past few years when record-setting fundraising and a steady flow of larger deals drove compensation to new heights. The Report, which covers later-stage buyout/growth equity,
early-stage venture capital and private equity fund of funds, includes compensation data for
Analysts, Associates, Senior Associates, Vice Presidents, Principals, Partners, CFOs,
Controllers, Fund Accountants, Fund Marketers, Investor Relations professionals and
Administrative/Executive Assistants. There were no major categories in which
compensation increased.

Brian Korb, Senior Partner at Glocap and head of its private equity practice, noted that in
addition to the reduced fee income, investment professionals’ own expectations for
compensation have been tempered due to the layoffs that shook Wall Street. He added
that pressure to raise compensation was reduced further by the diminished threats from
hedge funds and competing private equity funds, which in previous years had lured away
top talent with lucrative offers. “This is the first time compensation has fallen across the
board in the more than 10 years that we have been tracking it. Nevertheless, this
environment provides a healthy wake-up call that private equity is not an easy money
business,” Korb said.

The report continues to show that compensation increases significantly as the amount of
capital under management rises. Traditional later-stage private equity/buyout funds still
pay the highest compensation levels followed by venture capital firms which, in most
cases, pay more than fund of funds. Among the highlights of the report are:

• Base salaries across most categories were relatively unchanged from last year’s
levels, with most of the declines in total compensation reflected in reduced
bonuses.
• Total average compensation for Senior Associates at buyout/growth equity funds
held relatively steady with only 3% decreases.
• Total average compensation for Vice Presidents at buyout/growth equity funds
was down 5% to $424,000, with bonuses down as much as 10% in some
categories.
• Fund of fund compensation across all levels was down 1-3%, the lowest decrease
among the three asset classes.

The Report, the ninth annual, analyzes base salary and bonus compensation for thousands
of professionals at buyout/growth equity, venture capital and private equity fund of funds
for the years 2006 through 2009/10. Compensation is segmented further by fund size for
each asset class. A unique characteristic of the Glocap-Thomson report is that it does not
derive its compensation data strictly from a survey, but rather from a combination of
actual placements executed by Glocap, candidate data maintained by Glocap in the
course of its search business (including expected bonus information) and input from
Glocap recruiters, fund professionals and human resources personnel.

To buy the full report, click here