Every now and then (perhaps more often if you work in the financial industry), one should take a look at the compensation picture and compare how one is doing to others working in the same universe.
Each year, Job Search Digest conducts a comprehensive survey of private equity and venture capital professionals to reveal insights into the changing landscape of private equity and venture capital compensation. The following is a discussion of three points covered in this survey: how their money was made, cash earnings compared to previous year, and guaranteed bonus. The full details of the survey are available in the 2016 Private Equity Compensation Report.
How Was the Money Made?
The first view relates to how compensation was earned according to base and bonus pay.
Within the pay structure of private equity and venture capital compensation, what income level would you guess gathers the largest bonus pay? Unsurprisingly, the answer is individuals who make more than $1 million per year.
In 2015, of the average pay of about $1.2 million for individuals who made more than $1 million per year, about $700K, or more than half, stemmed from bonus pay. The picture changes significantly from there. Individuals who made between $500K and $1 million saw average bonus pay of about $300K, with base pay of about $350K.
Average bonus pay for individuals making between $300K and $500K was about $100K, with the remaining income categories seeing a much smaller percentage of their total compensation coming in the form of bonus pay.
How Do Cash Earnings Look Compared to Last Year?
The next topic is cash earnings. The following looks at the performance of individual cash earnings from 2014 to 2015. Do you think cash pay went up? By a lot or a little? Perhaps down? Or sideways?
The largest count of individuals said they saw cash pay growth by 0 to 15 percent (37 percent of all respondents). The next largest group had cash earnings of 16-100 percent more than the prior year. The third largest count of individuals said they received about the same amount of cash pay as what they received in 2014.
Lastly, about 7 percent of respondents said they made less cash earnings than the prior year.
How about Guaranteed Bonus? What Do the Most Recent Figures Look Like?
The third topic is guaranteed bonus. What do think respondents said? Interestingly, three out of four respondents said they received no guaranteed bonus. Far behind, in second and third places, are individuals who said they received 40 to 60 percent guaranteed bonus and 11 to 39 percent guaranteed bonus respectively.
Conclusion
Although 2015 will not go on record as a banner year for private equity and venture capital firms, they did turn in a solid performance which resulted in compensation gains and enhanced job opportunities for professionals in the field.
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