News & Analysis

PE pay on the rise, survey finds

More than half of North American private equity execs report an increase in their base salaries from 2014 to 2015, according to a new survey from recruiter Heidrick & Struggles.

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The majority of North American private equity professionals, from associates to managing directors, have experienced an increase in their year over year base salary from 2014 to 2015, according to fresh research from recruitment firm Heidrick & Struggles. Of those who experienced a salary increase, 58 percent reported that their salary had grown by 11 percent or more.

The 2015 North American Investment Executive Compensation Survey polled 434 investment professionals across 383 private equity firms regarding their base salaries, bonuses and carried interest payments.

The report included data on 2014 bonuses, as 2015 figures are not yet available. About 71 percent of the respondents reported higher bonuses in 2014 than in 2013, compared with 50 percent of respondents who reported higher bonuses in 2013 over 2012 in last year’s survey.

“We believe that this dramatic increase is tied to a favorable market for exits and fundraising,” the report noted.

Heidrick & Struggles further reported on the average carry payments for different executive levels at different sized firms. For example, the average partner/managing director at a firm with $1 billion to $2.9 billion in assets under management (AUM) earned $17.2 million in carry across all funds, while the average partner/managing director at a firm with $20 billion or more in AUM earned $26.2 million in carry.

Those in the partner/managing director role reported the biggest year over year increase in both base salary and bonuses from 2013 to 2014. The 90 respondents in that category reported that their base salaries rose from an average of $508,000 in 2013 to $577,000 in 2014, and their bonuses increased from $586,000 in 2013 to $662,000 in 2014.

Heidrick & Struggles also shed some light on private equity recruitment activity in the report, noting that they have seen “a dramatic increase of hiring into GPs” that has been continuing “unabated” since the final quarter of 2014. Most of this hiring has been at the mid-level, particularly in vice president and principal roles, according to the report.