Underappreciated VP?
Hey guys. So I'm in my 3rd full year as a VP post MBA meaning I am 2 and a half years out from graduation. And I find myself somewhat underwhelmed by my comp and I wanted to understand if you guys think it's market.
- Expected cash this year is 675k
- We receive carry annually based on fundraising, title, and performance. Thus far I have received an annualized 1.35m per year over my 2 and a half year tenure which vests pro rata over the subsequent 6 years. These grant sizes are supposed to increase over the next 2-3 years but nothing has been given in writing
- I would be up for promotion in another 2-3 years with indications being good so far
- Cash is expected to increase about 10% per year over the next 2-3 years
- This is a UMM fund in an HCoL city
- I only have one dedicated associate and 2 pooled associates (pooled amongst a large group of people) and likely no dedicated senior associate / junior VP for another year
Let me know your thoughts.
$675 might be a *tad* under market as a third year VP at a UMM fund but not enough to lose sleep over. The two things that are a little concerning are the carry and promotion timeline. The annual allocation thing is weird, basically everywhere else I’ve worked/seen is an upfront commitment (quoted in bps or DAW) to the fund that vests over 4-8 years, with additional amounts at promotion and new fundraises. The path to promotion also feels long, seems like 3-4 years from VP to principal is standard (although it depends on how many titles your firm has). Dedicated associates is also weird in my experience, every place I’ve worked has had pooled associates (by fund or industry group) vs. having anyone dedicated to a particular deal team.
Overall you’re probably fine.
Thanks for the response. I get a DAW allocation every year basically. Do you think it's equal to what it would otherwise be under a typical upfront + at promotion and at fundraise structure? For example if it stays flat for 4 total years at 1.35m? It's supposed to increase this year but I don't want to bank on anything not written down. I cover a large subverticalwithin an industry group which is why we have a dedicated associate. Yes Promotion is longer - we are basically 4-5 years to the next promote from VP. The bump in comp is supposed to be meaningful but again can't bank on what's not written down.
I agree with everything here - I wouldn't lose sleep over this comp number (especially in the current market) and think it's at market if you're expecting 10% yearly cash increases down the road. Promotion timeline seems about 1-2 years too long, any shot they can accelerate that for a top performer?
Not to undermine your concerns at all, but these seem like fairly minor complaints with a couple idiosyncracies to your fund. Unless you have some other big concerns not in this post, I'd poke around at promotion timeline but otherwise sit tight. Vast majority of places will have pooled associates, in my experience this adds to learning and makes everyone more well-rounded even if you'd prefer just one guy dedicated to your deals. Think of it as experiencing managing different people/personalities, which you'll need as you move up.
I'm confused on your carry. Are you saying that, on paper, you've gotten $1.35m each year (for the past 2 years) for a total of $2.7m? The other considerations are how far into a fund is this (i.e. did you just fundraise or are you 5-years into a vintage)? If the latter, is it reasonable to assume carry $'s in the next few years? What have returns been like?
Cash is pretty reasonable.
There was a 6 month grant too so it's higher but yes that's the math. Returns have averaged 2-3x over the last 4 fund cycles. 3 years into deployment. When I joined they had just raised. Don't think I can expect actual dollars for another 3-4 years.
I think that's a solid carry package.
Following
Dude is getting paid a million bucks a year and underwhelmed, good problem to have.
don't you get paid that much as a VP at a bank?
No
Unfortunately not
I know that everything is relative, but it blows my mind that anybody can say that they make almost $700K in cash plus carry and feel underwhelmed. Feel like at that point I'd ask myself more about whether I'm happy with the lifestyle and if there's a long-term future for me at the fund rather than if I'm "slightly under market"
That is my general orientation but Otoh I also don't want to become complacent. It's a delicate balance between maximizing my long-term trajectory but ensuring not being undercomped in the short term. The firm is willing to listen and have made adjustments in the past
Yeah. It's ridiculous and part of my gripe with current generation (I'm likely same age but don't like to think I align with it). Too many entitled people in a finance bubble. I get everything is relative, but still.
I actually actively try to think the opposite way. Ie I ignore whether an outcome is absolutely good or bad and always compare to what the market outcome is. As that removes judgment or entitlement - the market has spoken as to the wage it's willing to pay for my time and effort
Curious what your background was prior to your MBA? Did you attend a target or non-target?
PE is a massive bubble, my buddies at MFs are all idiots who haven’t had an original investment thought in years and make more than this
How much?
675K w 2.5 yrs experience? lol
Ha 7 years. 2.5 post MBA
what's total expected 2023 with carry distributions?
if under $1mm then ur underpaid
$0 distributions expected because the fund began deployment 3-4 years ago so def 1m
Out of curiosity, OP what is the title structure at your firm, and the overall promotion expectation through titles?
Your comp seems roughly in line with market. I didn't fully understand the carry mechanics though. UMM carry at 2x MOIC is generally $2-4M as a VP
This is a good source for compensation by fund size and level, albeit one year delayed: https://www.heidrick.com/-/media/heidrickcom/publications-and-reports/2…
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