Study: Big VC Firm Execs Rake It In

That was the bottom line of a new survey of compensation at private equity firms, which found that senior partners at independent US venture capital firms with war chests of more than $1 billion under management will get a median 2003 salary and bonus of $900,000. That compares to their counterparts at firms with less than $300 million under management who can look forward to a comparatively low $278,000.

According to the study, the pay differential was almost as great for independent US LBO companies. At those firms with more than $1 billion under management, senior partners will earn a median salary and bonus of $819,000 this year. Their counterparts at LBO firms with less than $300 million under management will pull in $350,000.

“Clearly, the study shows that partners at private equity firms have a vested economic interest in raising larger pools of capital, whether or not it benefits their limited partners,” said Robert Dunn, associate editor of The Private Equity Analyst and co-author of the study. “That’s not to say every private equity firm is looking to do this, but it is something an investor must consider when meeting with a general partner looking to raise a fund.”

Even lower level executives at larger VC firms did better, the study found. The median salary plus bonus is $225,000 for principals and vice presidents at independent venture firms with more than $1 billion under management while at firms with less than $300 million under management, the median for principals and vice presidents is $139,300.

Meanwhile, at large independent LBO firms, principals and vice presidents earn a median salary plus bonus of $335,000, compared with $180,000 for their counterparts at small independent LBO firms.

The Private Equity Analyst-Holt Compensation Study: Second Edition study surveyed 158 private equity firms worldwide on compensation practices for nearly 1,600 employees.