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How carried interest gets better with age

Private equity professionals who manage more than $20bn and have at least 16 years' experience earned $65m in carry last year.

Research from an executive search firm has highlighted the relationship between carried interest compensation and an investment professional’s years of private equity experience.

An executive that has managed $250 million to $499 million for less than three years earned on average $700,000 in carried interest last year, according to the 2018 North American Private Equity Investment Professional Compensation Survey from Heidrick & Struggles. This compares with $13.8 million for executives that had managed the same amount of assets for 16-20 years.

North American professionals who had managed more than $20 billion for less than three years earned just $1.6 million in carry last year, while those with 16-20 years under their belt earned $65 million.

There is also a modest correlation between AUM and carry earned. On average, executives who have managed $10 billion-$19.9 billion for seven to nine years earned $23.2 million in carry last year, while executives who managed $6 billion-$9.9 billion for the same period of time earned $12.6 million.

The report compiled compensation data from a survey of more than 630 investment professionals in North America.