Recently made the jump from Sr. Associate --> to VP and am looking for some guidance on market comp, specifically as it looks from the standpoint of a breakdown of base/bonus/carry.
I am currently at 6.5 YOE - 2 in brokerage followed by 4.5 at my current form.
HCOL, not NYC.
Smaller firm at just under $1B in total assets - I focus/run acquisitions on the bulk of our value-add commercial deals sitting directly under the managing principal of the firm. I have two direct employees reporting to me with plans to hire a third later this year.
We buy anywhere from 3-6 new deals a year with my responsibilities being full cradle to grave - most hands on during the actual acquisition process, less hands on during the development, but still intimately involved, then very involved at the dispo.
We switch off between doing deals internally with the principles capital (50%) of the time, raising single asset vehicles through HNW (25%) and at times close-ended funds (25%) with a very specific acquisition emphasis attached to it.
Ultimately, given our unique setup and my responsibilities I'm looking for some guidance on how to structure my comp in this new role.
Appreciate any advice.
Most people say the split should be 1-1-1, but if you adjust more one way or the other is a question of what you want to incentivize.
If long term results are more important and you want to handcuff someone longer, then you weight towards carry. If someone is less important to the outcome of a deal, you weight towards cash/bonus and keep the upside for yourself (i.e. how analysts/associates are easily replaceable).
The big question is do you plan to stay for however long to realize your carry? If it is a smaller shop that takes 5-7 years to realize a deal, will you be there long enough to get paid out? If no, then take more cash now. If you can see the long term, maybe you take more carry.
I actually think the 1-1-1 doesn't kick in until you probably have a couple more years under your belt (though some firms will do it earlier). I'd expect cash comp somewhere in the $200 - $300k range (yes it varies that much firm by firm). For 7 YOE at a shop of your size, I'd expect something like $140 - $160k salary, 50% bonus and some promote that's worth $50k+ per year (though I've certainly heard people get higher packages than this, this is probably the average). I'd expect your comp to increase another step in another year or two once you're more settled in as a VP.
Would be great to hear what other VP/Director's are making these days
What is 1-1-1? Just referring to similar salary, bonus, and promote?
It's a common structure at VP level where your target bonus is 100% of your salary and your anticipated promote should be 100% of your salary per year so that your total comp is equally 1 part salary 1 part bonus 1 part promote
I worked for a similar size shop in similar HCOL non-NYC market. I think my pay was undermarket, but here is what it was:
6 YOE - $110k salary, $25k bonus, $30k per year in promote
7 YOE (promoted to VP) - $140k salary, $50k bonus, $50k per year in promote
8 YOE - (got some deals done as a VP to solidify myself) - $170k salary, $100k bonus, $70 - $100k per year in promote
The promote I mention is theoretical and on base case and won't pay out for a few years
Holy fuck 110k base with 6 YOE. Some Kids out of undergrad make that base now days
Probably LCOL
Well that pay was around 2020 - 21 so keep that in mind. Compensation path was definitely derailed by COVID, and also don't think many, if any, 1st year analysts in real estate were making $110k salaries then (unless you're talking about post-MBA which I am not). Regardless, agree with you that it was undermarket.
I'll add a data point here and am hoping others at the Director/VP level will follow. I'm a director of development for a REIT in a HCOL (non-NYC) market.
Y1 as Director - $180k salary, 30% target bonus, $25k target for profit sharing (in form of RSUs that pay out over 4 years). Was at firm for ~4-5 months before first review cycle. Received full bonus and profit sharing.
Y2 as Director - $190k salary, 30% target bonus, $25k target for profit sharing. Got 150% of bonus and profit sharing for individual and team outperformance.
Y3 as Director - $200k salary, 35% target bonus, $35k target for profit sharing. On track to get 100%, but don't expect to exceed goals like I did last year.
How many years of experience do you have? Asking b/c it can vary so widely at the director/vp level
Got my MBA in 2017. Was in asset management for 2 years, and spent another 2 at a different dev shop.
When you say on track for 100% and 150%, do you mean of your base?
Sorry, should have been more clear. I got 150% of my target bonus that year. Instead of $60k my cash bonus was $90k. And instead of $25k in RSUs I got $38k.
Current comp as Director Year 9: $200k base / $250k bonus. Been at my current company for roughly 6 years now and starting to get fund promote distributions expected moving forward to get $1.5m - $2m every 3 years as we raise / divest discretionary funds.
Year 9 as director or 9 years of experience in CRE?
Both - I’ve only worked in CRE
How large is the firm and can you give more details on your promote with the funds?
What’s the total AUM of your firm? Or AUM per acquisition/AM professional?
$3B AUM / 15-20 people on AM and Acquisitions
Is this NYC-based? How are the hours? Is it sweaty?
Around 35 people - 1% - 1.5% of the fund.
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