Asia PE salaries rise as war for talent intensifies - survey

Average total compensation, including base and bonus, for a managing director was $825,550 last year, up from $660,790 in 2015, according to Heidrick & Struggles' 2017-2018 Asia Pacific Private Capital Compensation Survey. Director-level executives took home $482,070, an 18% gain from 2015, while vice presidents and associates have seen increases of 24% and 33%, respectively, to $354,980 and $277,270.

For those in partner and managing partner roles, the gains have been more modest in percentage terms – $750,270, up 15% on 2015 – but they generally receive the largest share of carried interest. The higher average salaries at managing director than partner level might be explained by there being more managing directors than partners with large-cap global and pan-regional firms in Asia.

Just over 40% of survey respondents reported a rise in base salary in 2017 over 2016, while approximately half saw their bonus increase. Sixty percent expect a jump in base salary in 2018. Heidrick & Struggles believes compensation growth will remain a key theme through 2019.

“With more private markets players and activity in Asia, we anticipate increasing competition for investment professionals with track records. That’s going to mean upward pressure on compensation in general,” said Michael Di Cicco, head of Asia Pacific private equity at Heidrick & Struggles. However, he added that his firm is advising clients to focus on long-term incentives and career progression plans, rather than just annual numbers.

Comparisons with previous surveys are problematic due to changes in the sample base. There were more than 170 respondents, compared to 210 for the 2016-2017 iteration, and the same investment professionals are not participating on a year-in, year-out basis.

For example, last year Heidrick & Struggles found that compensation, while still rising, was doing so at a slower pace than before. But the average total compensation for 2016, based on responses from partners and managing directors, was still higher than the same figure for 2017.

This discrepancy is worth bearing in mind when considering the huge jump in carried interest payments made to private PE professionals with mid to large-cap firms last year. Partners and managing directors responsible for funds of more than $2 billion saw their carry reach $8.88 million and $13.2 million, respectively, in 2017. This compares to $8.24 and $5.25 million the previous year.

Respondents from funds in the $1-2 billion range also reported increases: partners went from $17.3 million in 2016 to $29.8 million, while managing directors brought in $9.67 million, up from $5.92 million.

Meanwhile, the most recent survey also found that PE professionals in China and Hong Kong have been surpassed by their Australia-based peers as the region’s biggest earners. The average base salary in Australia was $334,870 and the bonus was $383,550, compared to $312,920 and $366,390 in China and Hong Kong.

Japan and Korea placed last, despite Heidrick & Struggles identifying Japan as having a serious talent shortage. “Japan has been a particularly challenging market for investment platforms seeking to expand at the senior level, including direct investments as well as big-ticket technology investments across the region as a whole,” the survey noted.

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