NEW YORK, Sept. 14, 2006 (PRIMEZONE) -- Private equity professionals in the U.S. are seeing their earnings climb more than ever before, with total take home pay -- including salary, bonus and carried interest, or the share of profits from deals that PE managers get to take home -- averaging $816,000, according to the annual edition of the Dow Jones Private Equity Analyst-Holt Compensation Study. That amounts to a 45% increase over the average total compensation reported in 2005 and is the largest year-over-year increase since the study began in 2002.
Across all investment positions, U.S.-based professionals at most firms -- excluding funds of funds and corporate venture -- saw base salaries rise 13% to $305,000. Adding in bonuses brought the annual average up to $505,000, representing a similar percentage increase, according to the study.
"In terms of compensation, it is a great time to be a private equity professional, particularly when carried interest is added into the equation," said Jennifer Rossa, managing editor of the Private Equity Analyst. "We're also seeing that firm size is playing a bigger role in determining compensation, with larger firms paying more and offering bigger raises. This creates a personal incentive for firms to raise increasingly larger funds and to raise as many as they can."
Not surprisingly, the compensation for the most senior-level executives -- such as managing general partners, senior partners and partners -- averaged even more. Base salaries increased 13.6% for these senior executives to $551,000 and salaries plus bonuses rose 11.6% to $919,000. Adding in carried interest brought the total up to $1.63 million, a 49.9% increase from last year.
Other trends identified in the study included:
-- Cheap debt and a favorable exit environment for existing portfolio
companies, via sales or initial public offerings, have led to
buyout firms doing very profitable deals, thus increasing their
compensation via carried interest. That means their compensation is
outpacing that of their venture capital counterparts.
-- Venture professionals are finally escaping the technology downturn
and are seeing compensation recover, particularly in the carried
interest category.
-- Administrative personnel like chief financial officers and chief
operating officers are being more handsomely rewarded as their
firms get larger and their jobs get more complicated.
To obtain a copy of the 2006 edition of the Private Equity Analyst-Holt Compensation Study, please call (877) 522-8663 or go to: www.privateequity.dowjones.com.
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