Private Equity Pays Up

Private equity and venture capitalists are earning record amounts, according to a private equity compensation report.

Glocap, a New York recruitment company, and Thomson Venture Economics, a private equity research group, said salaries and bonuses have increased at every level from analyst to chief financial officer.

The biggest increases were at large buy-out groups, where average compensation, which includes salary and bonus, rose by between 10% and 15%.

Average compensation rose by 7% and 12% at small to medium-sized groups and large venture capital houses and the lowest increases were at small venture capital houses, where compensation rose by between 2% and 5%.

The report also showed bonuses rose at a higher rate than salaries.

Average compensation for a senior associate at a large private equity group was $300,000, of which $140,000 was salary. The average compensation in 2004 was $263,000.

A vice-president's average compensation rose by 13% to $410,000, while principals enjoyed a 15% increase, with the top earners netting up to $675,000.

The increases took place against a background of record fundraising in the private equity and venture capital industries.

A senior associate at a large private equity group can expect to earn as much as $2m in profits or carried interest during a fund's lifetime.

The report predicted that compensation levels will continue to rise this year.

Glocap analysed compensation for more than 3,800 staff at 900 private equity, venture capital and fund of fund firms between 2002 and 2005.