PE firms freeze pay hikes, bonuses

With the economic downturn impacting deal flows, salaries of top private equity professionals took a hit as most firms froze pay hikes and held back bonuses this year, experts said.

According to experts in the private equity space in the country, top PE professionals, who draw huge eight-digit salaries at the top levels, have suffered a cut back in their remuneration. “Between 2008 and 2009, most PE funds have frozen increases in gross salaries, reduced the pay packages for new joinees and bonuses have not been paid,” recruitment firm focusing on PE and other financial services, Emploi Globale Consulting Chairperson and MD Shalini Sethi said.

 

“Performance benchmarks for professionals have been focused upon in a significantly higher manner in the year,” Sethi added. Another expert, who tracks the private equity space, said salaries of senior PE professionals had definitely taken a hit due to the fall in deal flows as the bonuses given to them are based on deals and exits from an investment.

“PE funds have always paid well to performers based on exits, this will continue ... Fixed CTC are also based on new funds being raised but this has not happened at the same pace, hence PE and venture capital funds will not see raises in salary next year,” Sethi said. According to global consultancy Grant Thornton, in the first seven months of 2009 there were 114 PE deals with an announced value of $4.89 billion against 214 deals worth $7.58 billion in the corresponding period in 2008.