Compensation drops at VC, LBO firms
According to the Private Equity Analyst-Holt Compensation Study as reported in this Wall Street Journal story (subscription required):
managing general partners -- the people who run the funds that invest in start-up companies and LBO deals -- saw their total median compensation fall to $604,000 in 2002 from $750,000 in 2001.
While the managing general partners in the top quartile will continue to earn an impressive paycheck -- a median of $1.4 million this year -- that is far less than the $3.2 million they earned in 2001. In contrast, managing general partners at firms in the lowest quartile saw their pay drop to $300,000 in 2002 from $364,000. Those figures include salary, bonus and what is known as "carried interest distribution." That refers to the percentage of a fund's annual profits that general partners typically earmark for themselves -- roughly 20% of a fund's profits. This year's low returns negatively affected that distribution.