More than half of firms in 2015-2016 didn’t boost salaries: Preqin

  • Private capital firms employ around 163,000 people globally
  • Managing GP/CEO at an LBO firm earns an average base salary of $574,221
  • 47 pct of private capital firms increased firm-wide base salary between 2015 and 2016,

Some 47 percent of private capital firms increased firm-wide base salaries between 2015 and 2016, a study from Preqin found.

More than half didn’t boost salaries: 38 percent left them unchanged and 15 percent cut them between 2015 and 2016, Preqin said.

Of those that did increase salaries, 7 percent boosted them by more than 10 percent, while 13 percent sweetened base salaries by more than 20 percent.

More than a third, or 37 percent, expected firm-wide base salaries to increase in 2017. Nearly one-fifth of this group, 20 percent, foresee increases ranging from 0.1 percent to 10 percent, while 7 percent look to boost firm-wide base salaries by more than 20 percent in the next 12 months.

As to why so many firms chose not to increase salaries between 2015 and 2016, “it could be indicative of a difficult fundraising period for some firms, but it might also be that some firms are placing a larger emphasis on rewarding employees primarily through performance-related compensation,” said Selina Sy, editor of the 2017 Preqin Private Capital Compensation and Employment Review, in an emailed response to questions.

FPL Associates questioned 175 private capital firms from May to September to produce the compensation review. The 175 included firms in private equity, private debt, real estate, infrastructure and natural resources.

Preqin estimates private capital firms employ around 163,000 people globally.

PE real estate had the most staffers, 38,600 people. Venture capital came in second with an estimated 36,600, while buyout shops had 34,600 and growth shops, 14,400.

More than 6,900 private capital firms currently actively manage funds, including private equity, Preqin said. More than half, or 58 percent, of firms questioned said they added to staff 2015, while 10 percent cut staff, the study said.

One of the most highly paid positions? The managing general partner/CEO of an asset-management firm with more than $1 billion in assets under management. Preqin estimated this executive takes home an average base salary of $609,808 with total cash compensation hitting $987,140 annually.

By comparison, a managing GP/CEO at an LBO firm earns an average base salary of $574,221 with total cash compensation coming to $809,536.

The same role at a VC firm wasn’t as highly paid, making a $547,898 base salary with total cash compensation totaling $667,002.

The head of PE real estate was also well compensated, pulling in an average base salary of $413,995. Total annual cash compensation, the sum of the base salary plus annual incentive award, was $808,045.

Meanwhile, a managing GP/CEO of growth capital/equity firm earned the least, making a $347,799 base salary with total annual cash compensation coming to $495,682.

Action Item: Contact William Clarke at william.clarke@preqin.com

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