Unique Comp Structures (VP/MD+)
The 1/3 base, 1/3 bonus, 1/3 promote split gets tossed around like gospel but I've found actual comp structures vary wildly depending on shop size, deal type, and frankly how good you are at negotiating. Especially once you're running deals soup to nuts at the VP/MD+ level.
Wanted to get a pulse on what creative structures people are seeing out there. I want to understand both market rate and affordable/LIHTC so I see the differences firsthand — promote means something totally different when your upside is mainly dev fee vs. back-end equity in 15 years.
Structures I've come across or heard about:
Fee-based comp:
- Dev fee carve-out — negotiating a direct % of the developer fee as it's drawn rather than waiting for it to flow through the company. Works on both market rate and LIHTC deals, though obviously more relevant on the affordable side where that fee IS the profit
- Slice of the deferred fee on LIHTC deals — Basically same as above, but you get paid out as the deferred portion gets repaid from cash flow over the compliance period (15 years)
- AM/PM fee participation (is this real??) — ongoing cut of asset or property management fees post-stabilization. Seen this more on affordable deals where you're holding long term anyway
Milestone/transaction bonuses:
- Milestone bonuses tied to specific hurdles — entitlement, loan close, TCO, lease-up, refi. Helps when promote is 5+ years out and you need to eat in the meantime. Is this more on the LIHTC or REIT structure?
- Completion/on-time bonus — kicker if you deliver on budget and schedule
Promote/carry variations:
- Tiered promote that steps up at IRR hurdles — your cut doubles if you hit 18%+ vs. just clearing the pref
- Flat promote per deal vs. fund-level carry? — Do any shops do $X per deal rather than points on a fund, easier to track and less black box?
- Year 15 exit participation on LIHTC — structured payout at sale or recap when the compliance period ends. This is the closest thing to "promote" on the affordable side
Commission-style:
- Internal broker commission on acquisitions of land or dispositions after stabilization/end of compliance— basically getting paid like a broker on top of your salary/bonus.
What have you guys seen?
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