A report by New York search firm Glocap Search suggests healthy pay rises for people working in top private equity funds.
Glocap's Private Equity Compensation Report, which draws on earnings of candidates placed by the firm over the previous 12 months, suggests employees at the largest private equity funds have seen cash compensation rise as much as 15% during 2005.
Senior associates working at funds with over $1.5bn under management earned average total cash compensation of $300,000 in 2005, says Glocap, up from $260,000 in 2004. Around $140,000 of this was base pay, with the remainder allocated as bonus.
Vice presidents at similarly sized funds saw cash comp rise some 13% to an average of $410,000 this year, while principals saw cash remuneration rise 15% to a maximum of $675,000.
Brian Korb, senior partner at Glocap, says the very biggest private equity funds are driving pay. The largest 'mega' funds can pay senior associates as much as $400,000 in cash compensation this year, says Korb, up from a maximum $360,000 in 2004.
He says carried interest earned from the returns on private equity investments is also being increasingly allocated to more junior members of staff at the funds. "We noticed more carry being allocated downstream to mid-level professionals - a lot of partnerships are focused on succession and there are a lot of other private equity funds and hedge funds out there chasing limited top talent."
A senior associate at a large private equity fund could expect to earn as much as $2m in carry during the lifetime of a fund, says Korb.