As always, suggestions are welcome, so please feel free to contact usor your Heidrick & Struggles representativewith questions and comments. We caution the reader that the list of factors may not be exhaustive. You may retrieve the full proxy statement by going to the Securities and Exchange Commission (SEC) website at www.sec.gov 2022 Private Equity-Backed CFO Compensation Survey. Pricing for assets is higher than ever and competition is strong. Perhaps because of this, the picture of compensation across US regions looked far different in 2020 than it did in 2019. The executive-search firm surveyed 656 senior financial officers, 56% of which had more . ), We believe that it is at least in part a reflection of the fact that there are relatively few women at senior levels at PE firms, particularly at the firms with the largest volume of assets under management, where compensation base and bonus is always higher than at smaller firms. Heidrick & Struggles' 10th annual survey includes a review of major hiring trends, an in-depth look into the structure of 2021 compensation packages, and a spotlight on trends in continental Europe. Heidrick & Struggles' 10th annual survey includes a review of major hiring trends, an in-depth look into the structure of 2021 compensation packages, and a spotlight on trends in continental Europe. However, there have been signs of a decrease in compensation, notably for fundraising professionals. We caution the reader that the list of factors may not be exhaustive. The Company's cost of services was $18.0 million, compared to $1.5 million in the 2020 fourth quarter, primarily due to the acquisition of On-Demand Talent and an increase in the volume of consulting engagements. (See charts Vesting basis, Basis of carried interest, Contributions to carry, Vesting of carry, Time to vest, on fund basis, and Time to vest, on deal-by-deal basis on pages 37 and 38 of the full report.). Please note that the mean can be influenced by particularly high or low data points, especially when the number of respondents in a given group is small. Fundraising slipped because of the pandemic, but the impact was lessened by the fact that PE had begun 2020 with very high levels of dry powder: at the end of Q1 2020, there was more than $550 billion that was less than two years old. All proxy statements are public filings made available to the general public by the SEC. This trend is being reflected across all private equity positions. We hope you enjoy reading the survey, and we welcome suggestions, so please feel free to contact us with questions and comments. There is also greater hesitancy (than there was before the pandemic) to switch firms because the increased private capital activity has professionals waiting for past awards to vest. Compensation Trends 2022 North American Alternative Asset Management Marketing and Investor Relations Professional Compensation Survey Firms continue to recruit heavily for heads of talent, chief financial officers (CFO), and head of portfolio operations roles, and we are seeing substantial interest in bringing on operating executives with digital expertise. Looked at by fund AUM, cash compensation was slightly higher at those with $5.1 billion to $10 billion than those with more than $10 billion. The latter region did outperform in other categories, with the exception of associate/senior associate, where it tied with the West Coast. Looking ahead, the horizon is more unclear. Numbers reported do not include change in pension value and non-qualified deferred compensation earnings. 5PitchBook, 2021 Annual US PE Breakdown, January 2022. These measures are presented because management uses this information to monitor and evaluate financial results and trends. This report is not for commercial use. Professionals who might have eagerly moved to a new country for a new role in the past remain hesitant to do so. The incredibly heated hiring market of the past three or four years seems to be mature, though it is not yet clear whether hiring will drop off a cliff or slowly cool. In addition to the need to pay competitively, this is also driven by the fact that executives new to the industry often leave behind equity compensation when they take new roles. Any insight on Senior Associate / VP level total comp for a $400MM fund? The largest and most operationally sophisticated firms are starting to develop a proactive, forward-looking strategy to hire and retain diverse talent, and we believe that all firms will need to follow this model if they are to compete for diverse candidates. Factors that may cause actual outcomes and results to differ materially from what is expressed, forecasted, or implied in the forward-looking statements include, among other things, the impacts, direct and indirect, of the COVID-19 pandemic (including the emergence of variant strains) on our business, our consultants and employees, and the overall economy; leadership changes, our ability to attract, integrate, develop, manage and retain qualified consultants and senior leaders; our ability to prevent our consultants from taking our clients with them to another firm; our ability to maintain our professional reputation and brand name; the fact that our net revenue may be affected by adverse economic conditions; our clients' ability to restrict us from recruiting their employees; the aggressive competition we face; our heavy reliance on information management systems; the fact that we face the risk of liability in the services we perform; the fact that data security, data privacy and data protection laws and other evolving regulations and cross-border data transfer restrictions may limit the use of our services and adversely affect our business; social, political, regulatory and legal risks in markets where we operate; any challenges to the classification of our on-demand talent as independent contractors; the impact of foreign currency exchange rate fluctuations; the fact that we may not be able to align our cost structure with net revenue; unfavorable tax law changes and tax authority rulings; our ability to realize our tax losses; the timing of the establishment or reversal of valuation allowance on deferred tax assets; any impairment of our goodwill, other intangible assets and other long-lived assets; our ability to execute and integrate future acquisitions; the fact that we have anti-takeover provisions that make an acquisition of us difficult and expensive; our ability to access additional credit; and the increased cybersecurity requirements, vulnerabilities, threats and more sophisticated and targeted cyber-related attacks that could pose a risk to our systems, networks, solutions, services and data. CHICAGO, Feb. 28, 2022 /PRNewswire/ -- Heidrick & Struggles International, Inc. (Nasdaq: HSII) (" Heidrick & Struggles " or the "Company"), today announced financial results for its fourth quarter and fiscal year ended December 31, 2021. While this data is from 2021, we have observed a more dramatic increase in compensation than we have seen, even beyond these numbers. This years survey includes a review of private capital activity in Europe and Africa for 2020 and 2021 to date, our thoughts on the major hiring trends for private capital professionals, and an in-depth look into the structure of compensation packages in the United Kingdom. Overall, we may well see flat compensation in the medium term after this years notable risesfirms will need to be clear about expectations to avoid dissatisfaction, even if the ability to move to another firm for notably higher compensation is cooling. The number of confirmed searches reached a quarterly record, increasing 44.9% compared to the year-ago period. Year-over-year, fixed compensation expense increased $10.4 million due to base salaries and payroll taxes, talent acquisition and retention costs, separation, stock compensation and the deferred compensation plan. 1 Margin based on revenue before reimbursements (net revenue). They have also turned to partial sales and recapitalizations, and have put high-quality assets into so-called continuation funds, as GP-led secondaries are now known. Firms must move quickly with the right offer or lose out, particularly with diverse candidates. 2 US PE Breakdown Q2 2022, Pitchbook, July 2022, p. 27, pitchbook.com. The authors wish to thank Mohd Arsalan for his contributions to this report. Henry Price-Haworth (hpricehaworth@heidrick.com) is a senior associate in the London office. Firms can attract, retain, and develop a more gender-diverse risk function by developing more thoughtful policies and processes and building a more inclusive risk culture. We are also seeing executives new to an operating executive role being compensated on par with those who have previous experience in this role. US PE exit activity shattered the previous annual records for both number of exits closed and their total value. Excluding these charges, adjusted operating income was $28.0 million, compared to $12.8 million in the 2020 fourth quarter. 2021 North American Private Equity Investment Professional Compensation Survey. This compares to net income of $5.5 million and diluted earnings per share of $0.28, with an effective tax rate of 54.0%, in the 2020 fourth quarter. Compensation is rising in many cases and hiring firms must be organized to move quickly to win the right talent. Only 7% had been a PE operating executive, and only 27% had been previously employed by a portfolio company of their current GP or investment advisor. Average Compensation $105,696 * Median Compensation * Estimated salaries Heidrick & Struggles Salary Averages By Department Recent Heidrick & Struggles Salaries Anonymously Contributed In terms of compensation by gender, the survey found, encouragingly, little disparity. Total Cash Compensation information is comprised of yearly Base Pay and Bonuses. 1US PE Breakdown Q2 2022, Pitchbook, July 2022, p. 6, pitchbook.com. Heidrick Consulting continues to build momentum from collaboration within the Company and is a a critical component of the growth strategy driving Executive Search and On-Demand Talent. We note that while female private capital professionals do not yet have compensation on par with their male colleagues, the increased competition for diverse candidates could help to close the gaps for women and other diverse professionals relatively quickly. 4 Includes restructuring charges of $0.1 million for the three months ended December 31, 2020. Variable compensation increased $73.6 million year over year due to an increase in production. 2022 North American Private Equity Investment Professional Compensation Survey. These numbers are not likely to be repeated in 2022 and are considered outliers. Stay connected to our expert insights, thought leadership, and event information. 3Includes a restructuring reversal of $0.1million for the year ended December 31, 2021 and restructuring charges of $8.6 million for the year ended December 31, 2020. 5Includes a one-time earnout obligation adjustment of $11.4 million for the year ended December 31, 2021. Heidrick & Struggles annual survey of investment professionals in the Asia Pacific region explores recent compensation data and trends across private capital. Some clients even expect the number of operating professionals to match investment professionals over time. As the pandemic spread last year, firms imposed hiring freezes. Management believes this information is also useful for investors. Anish Batlaw, managing director at General Atlantic, a global growth equity investor, discusses must-have criteria for CFOs and the global economic and geopolitical challenges ahead. For more information on the factors that could affect the outcome of forward-looking statements, refer to our Annual Report on Form 10-K for the year ended December 31, 2021, under the heading "Risk Factors" in Item 1A. Our second report on compensation trends for chief financial officers explores data from private equity professionals in North America and Europe on both organizational structure and compensation for this increasingly critical role. (See chart, Total cash compensation by education level, on page 41 of the full report. (For more on the methodology of this report, see Methodology on page 5 of the full report.). The forward-looking statements are based on current expectations, estimates, forecasts, and projections about the industry in which we operate and management's beliefs and assumptions. While it has been typical for total cash compensation for investment professionals in the Northeast to surpass those in other regions at all levels, last year managing partners in the Midwest and West Coast outperformed their Northeast peers. (For more, see 2021 North American Private Equity Investment Professional Compensation Survey) (See chart, General observations on total compensation trends, by gender, on page 10 of the full report. European leveraged loan issuance hit a record high in Q1. In our role as trusted leadership advisors, we partner with our clients to develop future-ready leaders and organizations, bringing together our services and offerings in executive search, diversity and inclusion, leadership assessment and development, organization and team acceleration, culture shaping and on-demand, independent talent solutions. Though the survey was in the field before the most recent UK financial crisis, rising interest rates and high inflation were already creating a relatively unfamiliar environment and an unpredictable future for businesses and consumers alike. ), We see generally lower compensation for women, particularly at the most senior levels. For full compensation data, download the full report. Cash compensation at the junior levels has been high, largely driven by the sources of talent for junior positions: as many private capital firms hire from investment banks, private capital firms are being forced to compete. We help our clients change the world, one leadership team at a time. Conversely, 23% of associates/senior associates made such contributions, up from 20% last year. Excluding the impact of exchange rate fluctuations, which positively impacted results by 210 basis points, or $11.9 million, net revenue increased $291.7 million, or 51.6%. On-Demand Talent, acquired on April 1, 2021, recorded year-to-date net revenue of $66.6 million and exceeded the Company's expectations due to increases in large account penetration, project wins, and higher than anticipated average project size when compared to the prior year. In the past, firms have made some efforts to hire candidates of underrepresented genders, ethnicities, socioeconomic backgrounds, and academic pedigree, as well as those who identify as LGBTQI. Together with our surveys of PE-backed CEOs, and PE investment and operating professionals around the world, these reports help to create a comprehensive picture of the compensation that key executives are currently receiving in a wide range of positions. Among PE investment professionals, vesting for carried interest is typically based on a straight-line schedule rather than a cliff-vesting schedule. What little hiring did happen was largely for operating partner roles as firms focused on strengthening their existing assets for exits, many of which were stretched beyond initial timelines due to uncertainty. Given the competition for junior investment professionals, cash compensation for them has risen notably. GPs are sensing opportunity in retail and hospitality. 3 Includes restructuring reversals of $1.0 million for the three months ended December 31, 2020. This year, they are demanding such candidates and the competition for them is fierce. Heidrick & Struggles' annual survey of investment professionals in North America explores recent compensation data and trends across private equity. Fundraising continues to be robust and bigger funds are leading to bigger dealsyet dry powder levels are substantial as well. Executive Compensation Data Year: 2022 2021 2020 Select Other Years Trend Analysis As Former Chief Operating Officer at HEIDRICK & STRUGGLES INTL , Michael Cullen made $2,519,568 in total compensation. (For more on the methodology of this report, see Methodology on page 5 of the full report.) Learn more at: https://www.heidrick.com/ At more senior levels, hiring is also active, mostly to drive expansion into new sectors or strategies. 6 Includes restructuring charges of $0.4million and $4.7 million for the years ended December 31, 2021 and 2020, respectively. Even though macro-economic factors are typically less of a concern given the sectors focus on relatively long-term investment returns, with institutional pension funds facing challenges due to high inflation that creates pressure to deleverage, private markets firms (particularly those in the United Kingdom) reliant on such LPs will likely find the already well-trod and rocky fundraising trail becoming even steeper. For the most part, this survey does not show one group being favored over another. 3 The Company incurred restructuring charges of $4.3 million for the three months ended December 31, 2020. 1 European PE Breakdown, Q2 2022, PitchBook, p. 4, 2 European PE Breakdown, Q2 2022, PitchBook, p. 11, 32021 African Private Capital Activity Report, African Private Equity and Venture Capital Association, April 2022, p. 3. Total Compensation The chart on this page features a breakdown of the total annual pay for Mark Harris , Chief Financial Officer at HEIDRICK & STRUGGLES INTL as reported in their proxy statements. Explore the latest episodes of The Heidrick & Struggles Leadership Podcast, Get the latest insights from Heidrick & Struggles, Heidrick & Struggles International, Inc. 233 South Wacker Drive Willis Tower Suite 4900 Chicago, IL 60606-6303 Phone + 1 312 496 1200, Chief Executive Officer & Board of Directors, Legal, Risk, Compliance & Government Affairs, On-Demand Project Leaders, Consultants, and Experts, Diversity, Equity, and Inclusion Consulting, 2022 Private EquityBacked Chief Financial Officer Compensation Survey, California Residents - Do Not Sell or Share My Data. Net income was $72.6 million and diluted earnings per share was $3.58, with an effective tax rate of 31.6%. Exit activity dipped and then rebounded, although exit timeframes were extended. 12020 Annual US PE Breakdown, Pitchbook, January 11, 2021, pitchbook.com. Heidrick & Struggles' annual survey of investment professionals in the Asia Pacific region explores recent compensation data and trends across private capital. Together with our survey of private equity operating professionals (coming later this year), this report provides a comprehensive picture of the compensation that North American private equity executives are currently receiving. Heidrick Consultingnet revenue increased 19.8% to $67.6 million compared to $56.4 million in 2020. Private capital deal making in the second quarter of 2021 posted its second-highest quarterly numbers, propelled by middle market activity as sellers reaped the benefits of high valuations and GPs began deploying the resources they amassed in 2020. www.heidrick.com. Pursuant to the requirements of Regulation G, this earnings release contains the most directly comparable GAAP financial measure to the non-GAAP financial measure. Michael Pontzen, the CFO of chemicals company Lanxess, shares how the companys aspiration to be climate-neutral by 2040 will impact the companys workforce and what challenges CFOs will face in the coming years. As integral as the operating executive role is, private equity firms are offering more geographic flexibility. (See chart, Comparison of compensation across US regions, on page 40 of the full report. That pulls the average down. Notably, US PE firms completed approximately 4,000 deals, with a cumulative value of just over $400 billion. Compensation is once again rising for all professionals, with increases in base salaries of 21% or more for almost half of respondents expecting an increase. Looking ahead, since this survey was collected, we have observed an increase in compensation even beyond these numbers, which is being reflected across all PE positions. Operating margin was 5.8%, compared to 5.3% in the 2020 fourth quarter. 2Includes restructuring charges of $3.9million and $30.5 million for the years ended December 31, 2021 and 2020, respectively. (See charts United Kingdom: General observations on compensation trends, United Kingdom: General observations on total compensation trends, by gender, and United Kingdom: Mean base, bonus, and carry by fund size, 2021 on page 1517 of the full report.). Overview 571 Reviews 18 Jobs 944 Salaries 114 Interviews 154 Benefits 54 Photos 163 Diversity Follow + Add a Salary Heidrick & Struggles Salaries How much do Heidrick & Struggles employees make? Hiring has been particularly strong at the pre-partner and deal captain level, which in many firms in a more receptive entry point than the partner level. Likewise, partners/managing directors in the Southeast and on the West Coast did better than those in the Northeast. (See chart, Co-investment eligibility and rights, on page 39 of the full report.). In an online survey, we asked participants to provide compensation data from 2021 for bonuses and 2022 for base compensation. Over time, this discrepancy should narrow as more female investment professionals are actively recruited into private equity, albeit at the junior ranks. John Rubinetti (jrubinetti@heidrick.com) is a principal in the New York office and a member of the Private Equity Practice. Record consolidated net revenue of $285.5 million grew by $124.6 million, or 77.4%, compared to $161.0 million in the 2020 fourth quarter. This compares to a net loss of $37.7 million and diluted loss per share of $1.95 in 2020, with an effective tax rate of (20.1)%. 1y a Senior Associate I know their is the Heidrick & Struggles comp report, but was hoping to get some direct comp information. 2Dominick Mondesir, European PE Breakdown, Q2 2021, PitchBook, July 19, 2021, pitchbook.com. Fundraising also slipped because of the pandemic, but the impact was lessened by the fact that PE had begun 2020 with very high levels of dry powder: at the end of Q1 2020, there was more than $550 billion that was less than two years old. Including restructuring charges of $3.8 million and $52.4 million in 2021 and 2020, respectively, and the one-time On-Demand Talent earnout charge of $11.4 million recorded in 2021, and the non-cash impairment charge of $33.0 million recorded in 2020, operating income for 2021 was $98.3 million compared to an operating loss of $35.5 million in 2020. Cost of services consists of third-party contractor costs related to the delivery of various services in the Company's On-Demand Talent and Heidrick Consulting operating segments. Looking ahead, after the boom private markets have experienced over the last few years, many are anticipating a correction in valuations and capital raised and deployed, as the European exit data indicates. 18 Jobs 944 Salaries 114 Interviews 154 Benefits 54 Photos 163 Diversity + Add a Review Heidrick & Struggles Reviews Updated May 16, 2023 Filter by Topic Remote Work Work Life Balance Coworkers Culture Career Development Compensation Workplace Senior Leadership Benefits Management Diversity & Inclusion Covid 19 Search Reviews Search Reviews How best to compensate these executives remains a question firms wrestle with. Our third annual report provides a comprehensive picture of the compensation that North American executives in the hedge fund, real estate, and private equity industries currently receive. Heidrick & Struggles compiled compensation data from a survey of 939 investment professionals in North America. Heidrick & Struggles' annual survey of investment professionals in North America explores recent compensation data and trends across private equity. Fourth Quarter Highlights: John Rubinetti (jrubinetti@heidrick.com) is a partner in the New York office and a member of the Private Equity Practice. There are multiple signs that PE activity is returning to growth in 2021: Despite fears of a very slow market because of COVID-19, hiring returned to its 2019 levels by the end of 2020 and momentum is continuing in 2021. LPGP agreements are very strict about how firms can spend money or charge for expenses, and it can be hard to fit operating partners into that construct. emphasizing the value of these roles beyond compensation, including working at the cutting edge of law and . HEIDRICK & STRUGGLES INTL income statements for executive base pay and bonus are filed yearly with the SEC in the edgar filing system. Heidrick & Struggles' ninth annual survey includes a review of major hiring trends, an in-depth look into the structure of 2021 compensation packages, and a spotlight on trends in the United Kingdom. Growth equity reached the highest deal value on record. Excluding charges in both years, adjusted operating income for 2021 more than doubled to $113.4 million compared to $49.8 million in the prior year, and the adjusted operating margin was 11.3% compared to 8.0% in the prior year. Consolidated salaries and benefits were $204.1 million compared to $120.8 million in the 2020 fourth quarter. Despite many people working in remote, low-tax locations, compensation has not decreased: slightly more than half of all respondents (56.7%) reported an increase in base last year, and 54% expect an increase this year; with most (76%) seeing increases of 20% or less. Jonathan Goldstein (jgoldstein@heidrick.com) is the regional managing partner of Heidrick & Struggles Private Equity Practice for the Americas; he is based in the New York office. Bigger funds and record levels of dry powder have led to bigger deals. Excluding the previously mentioned non-recurring charges, adjusted net income was $20.8 million, compared to $11.6 million in the 2020 fourth quarter. We expect some slowing in hiring in the near term, particularly given how much hiring firms have already done over the past few years but also as a result of larger macro issues and the increased cost of leverage. Explore the latest episodes of The Heidrick & Struggles Leadership Podcast, Get the latest insights from Heidrick & Struggles, Heidrick & Struggles International, Inc. 233 South Wacker Drive Willis Tower Suite 4900 Chicago, IL 60606-6303 Phone + 1 312 496 1200, Chief Executive Officer & Board of Directors, Legal, Risk, Compliance & Government Affairs, On-Demand Project Leaders, Consultants, and Experts, Diversity, Equity, and Inclusion Consulting, 2021 North American Private Equity Investment Professional Compensation Survey, World Economic Outlook Update: Fault Lines Widen in the Global Recovery, California Residents - Do Not Sell or Share My Data. 1,611 (2018) Website. Associates continue to make strong gains. Stephen Schwanhausser (sschwanhausser@heidrick.com) is the global managing partner of the Consumer Markets and Private Equity practices; he is based in the Stamford office. "We are very pleased with our outstanding fourth quarter and year-end performance, which continues to build the foundation for ongoing shareholder value creation," stated Heidrick & Struggles' President and Chief Executive Officer, Krishnan Rajagopalan. Net revenue growth was driven by all regions in Executive Search, Heidrick Consulting, and by the addition of On-Demand Talent. Total Cash Compensation information is comprised of yearly Base Pay and Bonuses. Consolidated Statements of Comprehensive Income (Loss).
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