PortCo C suite Comp Insights
One of my good buddies dads is a COO of a ~$500MM revenue, $30MM EBITDA PE owned manufacturing business approaching exit (has been held around 5 years).
~$575k cash comp, 100% bonus target, and ~3% equity ownership (clean vesting, no hurdles, just vests over three years or fully upon exit, multi 7 figures). Great hours. Industry veteran however, SVP/EVP for ~25 years at a tens of billions of dollar revenue F500 manufacturing.
Will be promoted to CEO upon exit (already informally talked about with current CEO, who is getting old), and will get to really negotiate terms then (~$700k cash), larger equity stake, car allowance, all travels business/first, etc. Also has been engaged by former PE execs to sit on a few nice boards.
Wondering if you have any other data points for C suite PortCo comp. Seems like becoming an industry expert and going portco leadership could be attractive, and you generally add way more value. Easier said than done of course.
Mid West manufacturing CEO, believe cash comp at like $450K, but meaningful presence on the cap table that would yield a few million upon exit. Much smaller business, like $100MM revenue. Being on a PE fund's short list for operators can yield you some serious cash.
Operators are a highly underdiscussed role on here when it comes to path to a great net worth. Working on the WM side have had numerous clients who work in industry (similar to OP at large, public companies) and then latch on to a few PE firms where you get brought in as a CEO for the life of the PE hold and make $5-10mm per deal. This can lead to board ops which usually equals equity and you can have a machine of liquidity events lined up.
Agree that the comp for CEO / COO / CFO roles is very attractive at PE-backed companies especially given the liquidity event every 3-7 years. I think tough part is getting to that level in a reasonable amount of time. Most of the people that are in those roles are at least 40 (w/ slight skew towards ~50 years old). So I would argue it ends up being pretty similar if you just ended up staying in PE as you probably have higher cash comp leading up to the senior level positions.
2021/2022 PortCo compensation survey. LMM to MM Healthcare and IT
This is pretty spot-on in my experience.
Do you think the figures I presented are on the upper end of the spectrum (it appears so), or is it more natural given the size of the business?
Yes, he is mid 50s, but has been making around $2mm annually at the public company for at least a decade.
Where can I find data like this for other industries?
This was released directly by the PE group under their "insights" tab. Probably will be difficult to find accurate data unless released directly by the PortCo or PE group
Comp packages suck for operators relative to the investment end of things. I believe most operators are severely undercompensated personally.
If I am getting brain damage operating, then I want a huge equity stake. Don’t get why these guys don’t do their own thing.
I get that it’s a different skill set but if you’re an operator with 20 years of experience, put some cash up, take risk and team up with a sponsor to buy something.
Really surprised you got MS for this. Have seen this first hand at a MF backed company that I worked at previously. Strategy / business development (corporate development leads was ran through this team) got paid way better than their counterparts who were in operations. A lot of the original seniors on these teams got really cool offers for PortCo work at MM PE firms after they got their payout from the buyout / hitting performance goals for post acquisition (were millionaires by the time they left).
A lot of the senior operators (SVP/EVP and above) were cofounders and had juicy equity percentages but there were only maybe a handful of those people. Our Directors/junior VPs in Ops role got paid way below market and rarely got promotions / flexibility with changing roles internally. I worked in operations pre-MBA and trying my hardest not to go back into it (I wouldn't mind later on in my career if I come in at a senior level but I hated managerial operations work at the junior level).
Exactly. I find it odd given a bad or mediocre operator can easily tank a company’s performance. Good operators are also very very hard to find.
It's a very underrated path to wealth. Charles Aris puts out nice comp reports twice a year. If you enjoy operating more than investing and don't want to put your own capital at risk, a PE portco role is a great lucrative path.
This is an above market comp package especially on the cash. What does 3% equity mean? He was granted RSUs of some sort? Or do you mean options equal to 3% of the fully diluted sharecount? Either way for a COO that's rich. I've seen ~10% plans and CEO takes 25-50% of it with the number 2 in the 10-25% range. Maybe your plan is huge
also what's total SGA?? These guys have 6% margins and are paying 1m cash to one guy??
Yes, 3% of the fully diluted share count. The previous COO gave up his shares for a big cash payout upon exit and the CEO actually gave up some to draw over this COO. Will try to figure out more about the G&A, but yes easy $1mm~ cash comp, which is for sure above market. Not sure what the total equity pool is for management, but the CEO only has maybe another half a point above the COO, which is interesting. Dynamic is such that the COO is taking on a lot of the CEOs roles however as he nears retirement at exit.
Quam corporis vitae blanditiis veritatis voluptatem odio. Perspiciatis eos et ipsam quis. Et nesciunt quas voluptatibus. Placeat qui hic repellendus ea cumque dolor. Velit est asperiores expedita aperiam odit alias. Id suscipit corporis voluptate non distinctio unde. Non blanditiis molestiae omnis beatae quisquam rerum.
Nisi quisquam sint excepturi et. Unde porro eos porro dolor exercitationem. Non voluptatem nesciunt non nihil nemo corrupti fugiat.
Voluptatem sequi voluptatem libero ut. Sit aliquid qui velit fuga velit minima magni. Aut id consequuntur eos veritatis aut rem fuga.
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 Unlock with your social account...