2021 VP PE Compensation Thread
There's a lot of associate compensation information floating around, but less so on the VP side. Starting a thread to share VP (or Director / Principal) level 2021 compensation, particularly in light of the crazy year the industry has had and whether you all have seen compensation rise.
I'll start:
Third year VP at UMM PE ($8bn+ latest fund size)
Base: $275k
Bonus: $500k
Carry: 25bps (approx $4.5M - $5.5M in target dollars)
Edit: the carry is what was granted to me for our latest fund, not a special grant this year...
Random question..
Let’s say I just get promoted to VP and get say 25bps or carry that will say pay out in 5 years, and I expect the total value is 5M
Let’s also say it vests 20% per year.
What if I left (in good standing, just want to take a few years off) after 2 years? I would still be paid out the 40% of the 5M (if the fund hits target performance ofc) right?
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It really depends on the fine print. I've seen this treated two ways:
1. What above poster said - you only get carry on the $s that have been deployed, and that amount deployed is subject to a vesting scheduling (e.g., 40% year 1, 60% year 2, 80% year 3 or whatever it is). So in that case, the math is it works out to pretty low of the overall pie.
2. I've also seen "fund-level" carry where the math may be a more favorable - e.g., you get 40% of the total carry pool... but in the case where this happened the person's carry got bought at at the mark (which is not good as the mark is likely lower than what it will ultimately be realized at at the end of the day)
My 2 cents - there used to be a time (and still exists in certain sectors) where Carry was a pretty 'safe' proposition - i.e., you're definitely gonna get paid beaucoup bucks. However, in more recent years, I've personally taken a more conservative approach to thinking of my carry - i.e., between funds not performing well, the potential for severely extended duration of realization, and changing jobs (which will always result in significant money left on the table), I index less on it these days...
Thank you for starting this thread. Interested to see how VP pay is in Growth Equity… Currently first year associate at a $1-3bn fund and contract stated ~$260k all in, so want to see how that could potentially scale as I move up
Curious what your hours are like and what type of shop you’re at
Was that 25bps of carry that you received incrementally this year on top of what you already had?
Not incrementally this year but in relation to my grant for the latest fund. Bps didn't change YoY
VP1 @ a ~$4-6bn fund
Base - 150
Bonus - 400
25 bps working out to ~$3-4mm
LMM in LCOL? Lowest base I've seen for a vp.
UMM NYC...
Lol not many LMM firms raising $4-6B funds… nor many LCOL firms firms paying $550k cash to a VP1
Similar fund size for VP1
Base: $200K
Bonus: $330K
30 bps working out to similar target carry dollars at ~2x
For those who get carry, did you have to contribute to the GP commit and how is that done?
Different firms do it differently, but yes, generally you do. I'm the OP, my commit to the GP is $400k.
Often allocated based on your carry percentage, but as stated above lots of variance. We don’t require any GP commit since our partners take it all, but we still allow co-invest and I put in a sizable amount that way
I had to contribute $ for my carry.
Vp1
Strategy - secondaries
Combined ltm cash: ~450k (bonus 300)
Carry 1%
Latest fund size - middle market
What DAW does that carry % equate to roughly? How are your hours in secondaries and did you do that as an associate as well or work in buyout before?
Daw >$1m
~50hrs / week
Yes, have been in secondaries for some time
3rd year principal at MF ($15bn+ latest fund size)
Base: ~$300k
Bonus: ~$600-700k
Carry: 30bps (should end up being $10-20mm but it’s a very theoretical number)
Thanks for sharing! How many years of work experience out of curiosity?
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Not Op but a lot of shops go aso 4 years —> principal 4-5 years —> partner. So not unreasonable to be partner at age 31/32
How does these carry numbers work. Is it annual? but just paid out over a long time.
Would also like to know.
Senior associate going into 2nd year
LBO buyouts / growth equity investing in LMM
Cash: $230k all in (don't have bonus yet but factored in the expectation
Carry: 0.5% (deal-by-deal), equates to roughly 1-1.5x cash comp on 2x. First exit/check should be seen in next 12 months
Feels like I'm underpaid on most fronts but our set up is on the better end of PE hours.
What was your split between cash / bonus? Also, 0.5% seems low for a LMM firm, what are your firms typical check sizes in a deal?
usually 50/50 split although my comp was closer to $300 this year as I got a much larger-than-expected bonus. Checks are usually $25m.
Was a senior associate at NYC MM ($1.1B fund size) this year, made ~$315k cash plus 50 bps of carry. Currently waiting to hear on VP comp but based on what I’ve heard I’m expecting $350k-375k with 100-125 bps carry
FWIW this is very similar to where I am as a VP-1 at a nearly-identical fund size.
could someone break down for an idiot like me how “25 bp” of carry works? I work on the HF side and looking to compare my comp to equivalent PE comp, and finding it difficult to compare. Do you have to put up your own capital for the 25bp of carry? How do you calculate carry being worth “4-5mm” from the 25bp?
For example, you get 25 bps of the carry pool and the dollars at work (DAW) is usually assuming a 2x fund (pretty conservative if your fund historically kills it). So $1 bn fund, a 2x gross return = $1 bn profit = $200mm carry pool. 25 bps of that is $500k you would expect to receive over life of fund. You can imagine how that scales if it were an $8bn-10bn fund..
I’ve never had to contribute money to receive carry, but I have coninvested alongside the gp before which is a separate structure.
Not sure if the dynamics around contributing your own capital for carry, but can translate how 25 bps equates to around ~20M in carry. Let’s say you have a fund size of $10bn and you are given 50bps of carry for some easy math. That 50bps translates to around ~$10M carry or dollars at work. This is because you are allocated that carry under the assumption that the fund will perform at a 2x (some funds could have it differently), so a 2x for a $10bn fund means $10bn of profit. From here most funds take 20% so that means you have $2bn of “carry dollars”, and your portion is 50bps or $10M. Obviously if the fund does better than 2x than your carry will be worth more, abs vice versa. Hopefully helpful.
This is my understanding, but curious to others thoughts if I’m wrong.
i don’t have to invest. not sure what’s typical. i wonder if it has anything to do with tax treatment (ie invest in the gp to get cap gains treatment? no idea)
value is a modeling exercise. you just look at the projected returns of the fund and how much the gp expects to earn via the promote. you get a % of that
VP-1
Base: $260
Bonus: $110
Carry: $2.5m vested over 5 yrs (~1% of pool)
Fund Size: $2bn
seems low on cash comp but pretty solid if not high on carry. Would be curious on others' thoughts.
Seems about right to me since Vp-1 at his shop could be Snr As at another.
That was my thought as well - definitely need a more long-term mindset with this comp structure
3rd year VP at a MF (NYC)
$225k base and $450k bonus
Roughly $8m total carry dollars at 2x MOIC
Did you get the carry allocation when you started at VP 1 or was there a change at some point (e.g., new fundraise)?
Pan-european fund based in London, c. EUR1.5bn size, principal (5 years in PE and 10 YOE in total), base is 175K + 100% bonus. Carry 1.5%
Y’all mofos rich af
Spare any change?
Got the VP promotion communication earlier this week.
Fund Size: Fund I w/ target size of 600-700mm
Base: 175
All-in: 400
Carry: 2.5-3.0%
Congrats!
Damn sounds solid, congratulations
bump
Any London peeps?
Feels so underpaid. Vp1 (first full year after b school). 525 all in and expecting 570-600 as vp2. UMM fund
No carry? Seems okay on a cash-basis
Yes carry is a bit complex based on deals and what not but comparable to market in the 3-5m range per fund
Just removing for now until further details finalized.
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