Short-term cash reward of Investment Professionals in private equity – UK vs US
February 16, 2022
As specialists in Executive Remuneration and with strong ties to the Private Equity market, MM&K partners with Holt in the US, to run an annual compensation survey of over 170 alternative investment fund management firms across Europe and North America.
We appreciate that there has long been a general assumption that the US typically compensates much higher than the UK in the alternative investment industry. We felt however that it would be interesting to analyse the extent to which this is true, and to see what the pay differentials really are for investment professionals as between the two regions.
The data that has been analysed for this article is from our 2021 European and North American Surveys and the analysis looks at the differentials in median base salary and salary + bonus, between the two regions and across the seven main investment professional roles – Managing General Partner, Senior Partner, Partner/MD, Principal, Vice President, Associate and Analyst.
In the case of the Managing General Partner role – the highest-ranking investment professional – the US pays 10% more than the UK on base salary alone. However, when bonus is considered, the US reward totals almost 70% more than the UK.
This trend of higher compensation levels in North America continues down through the ranks and can be summarised as follows:
|Base Pay Differential (US over UK)
|Total Short Term Cash Differential (US over UK)
|Principals and Vice Presidents
*Exchange rate used: £1 = $1.35
It is interesting to observe that, as one goes down through the levels of seniority, the differentials narrow. We would say that this is to be expected, but one might ask what is the main reason driving the much higher differentials at the partner level.
Our answer to this can be summarised in one simple sentence. Fund sizes in America tend to be quite a bit larger than they are in the UK, meaning that the management companies tend to earn considerably higher management fees, including on a per head basis. It is this simple fact that mainly drives the higher pay levels in the US, especially for partner level incumbents.
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For more information, please contact George Edwards.