PE Portco Mgmt & Employee Compensation
I don't have a good feel for this, hoping some of the seasoned private equity professionals can chime in with insight.
Question -- In terms of % of the total B unit pool, what are some ballpark ranges that are custom for CEO, CFO, COO, SVPs, VPs, etc?
Comments (7)
Suppose I'll shamelessly bump this up, not sure how to get more eyeballs (or maybe no one cares, which is fair).
Bump
Can vary a lot depending on ownership, mgmt ability, size of company, etc. In the LMM where I play, I have seen (out of 10% option pool; assuming mgmt aren't shareholders), CEO's at 1-4%, CFO's at 1-2%, then goes down from there. Some people can even get .10% for folks that are important but generally lower level.
Thanks for the reply, helpful. So to gross those up to a kind of "% of mgmt pool" just multiply those by 10 I guess.
If it wasn't obvious I am trying to gauge where I am vs. market.
Texas Tea, some thoughts:
The % allocation will depend a lot on the enterprise value of the company and the philosophy of the PE firm. We had option pools that ranged in size from 10% - 18% (assuming this is for North America). Generally at the beginning of the investment, the CEO would get 4-6% with the CFO getting 1-3%. The CFO could vary widely if the individual was a seasoned CFO with a full skill set versus a controller who was recently promoted to CFO and needed lots of help on things such as the banking arrangements.
Where you go from there depends on the organization. Typically we would rely on the CEO to make a recommendation to the compensation committee for the allocations, but we would guide the CEO on how to thing about it. People who reported directly to the CEO would typically get between 0.25% - 1.0% (where 1.0% might be the head of sales who attends board meetings in a sales-oriented organization). In some rare circumstances, we would do option grants another layer down for something like regional sales managers or divisional leaders, but those amounts could be as little as 0.1%.
Note: All percentages expressed as a percentage of the total equity value of the company.
Mentorship with CompBanker: https://www.RossettiAdvisors.com
Thanks CompBanker, much appreciated.
Repellat ut ipsam hic reiciendis animi. Quisquam optio provident omnis vel voluptatem.
Sed sit maxime ex qui quisquam. Quod sed autem facere. Voluptatibus omnis eum aut eaque ut. Consequatur et sunt ut laudantium alias qui. Corporis numquam quo architecto et est tempore qui iste.
Autem omnis ut vel nam incidunt sit qui. Qui dolorem voluptatem sunt non qui. Recusandae repellat ab debitis ipsa et. Ullam eos expedita est et. Error error et distinctio omnis alias quam.
Est consequatur nihil id soluta et perferendis corporis ut. Et et eaque quibusdam. Sit qui quod odit id ipsam.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Want to Unlock by signing in with your social account?