2018 REPORT POWER POINT Oct 2 from Kelley

Holt-MM&K-Buyouts Insider PE/VC Compensation Report Current Trends in Design and Levels of Compensation in the Private Equity and Venture Capital Industry

2018-2019

Preview Table of Contents

Survey Background I. Introduction/Participant Summary 1 Key Findings 2 The 2018-2019 Holt-MM&K-Buyouts Insider Scope and Methodology 8 Private Equity and Venture Capital About the Authors 13 Compensation Report is a joint effort of three parties. They are compensation consultants Holt II. Financial and Operational Data 15 Private Equity Consultants and MM&K; and Committed Capital and Cost of Investments 16 global private equity publisher Buyouts Insider. Number of Funds Managed and Number of Portfolio Companies 17 It is jointly written by Michael Holt, David M. Ownership Structure 18 Toll and Joseph Weitemeyer. Management Fees/Other Fees/Fee Ratios/Fee Splits 19 Copyright Information III. Human Capital 23 Data and information in this report is copyrighted by Number of Employees per Employee Group 24 the authors. Electronic and printed copies of this Staffing Changes 2017/2018 25 report can only be shared with employees of the firm Investment Manager Ratios (Capital/Fees/Portfolio Companies) 27 purchasing the report. Users are forbidden to Human Capital Policies/Years to Partner/ MBA Hiring & Compensation 28 reproduce, republish, redistribute, or resell any materials from this report to any party who is not Payroll Cost and Total Employees 29 employed at the organization purchasing the report in either machine-readable form or any other form IV. Compensation Strategy 31 without permission of the authors. No part of this Types of Compensation 32 report may be copied, photocopied, duplicated or Salary & Bonus Changes 34 forwarded in any form or by any means without the Annual Bonus Plans 38 publisher’s written consent. Failure to abide by this Carried Interest Plans 40 will be considered an abuse of Federal Copyright Law Employee Benefits 50 (17 USC 101 et seq.) and may be subject to criminal General Partner Commitment (GPC) 53 penalties and liability for substantial monetary damages. Co-Investment Plans 55 For permissions and other copyright-related questions, V. Year to Year Changes in Compensation Levels please email your question to: Geographic Differences 57 [email protected] [email protected] VI. Compensation Levels Per Position (By Type & Size of Firm) 62

VII. Compensation Levels by Type & Size of Firm – North America, Canada, Asia Pacific, & Employee Benefit Costs 127

© 2018 by Holt Private Equity Consultants, MM&K Ltd. and Buyouts Insider. All Rights Reserved Private Equity and Venture Capital – North America Report Page 1 Scope and Methodology PART 2. Sections II - IV: Strategy and Design

PART 2. Sections II - IV are the qualitative or "How" sections of the report. We collected and analyzed data concerning financial and operations information; human capital practices; and the design of compensation plans including salary, bonus/incentive plans, carried interest plans, co-investment plans, general partner commitment and employee benefits. Although this is 2018 information, we believe it can be helpful in planning for 2019.

PART 2. Sections II - IV Firm Classifications: Sample Characteristics We classify firms by type and by committed capital to all active funds. The table below shows you the number of firms populating each of the 16 Altogether we created 23 sample groups to complement our discussion of sample groups used in Sections II-IV of this report covering firm-wide firm-wide compensation issues (Sections II-IV of report). The smaller samples compensation practices. You can also see the make-up of each sample in (ie. Large VC or small/mid-size VC) correspond to your peer groups; the terms of assets under management (committed capital, all active funds). larger samples (ie. All Firms) showcase broader industry trends.

• LBO/VC/Mezz: Combines LBO / Growth Equity / VC, and Mezzanine firms into one “Catch-All” category with a standard 20% carried interest Table 11: Firm Size Statistics > Large: firms with $1.5 Billion plus in committed capital (all active funds) >Small/Mid-Size: firms with less than $1.5 Billion in committed capital (all Committed Capital ($Millions ) active funds) Firm Classif ication All Active Funds >All Firms # Firms Avg. 25th 50th 75th LBO/VC/Mezz (Large) 27 2,455.97 1,682.22 2,000.00 2,716.93 § LBO / Growth Equity – same as LBO/VC/Mezz: LBO/VC/Mezz (Small/Mid-Size) 33 629.58 357.45 506.00 905.00 § Venture Capital – same as LBO/VC/Mezz: LBO/VC/Mezz (All) 60 1,451.45 492.25 1,219.22 1,917.29 § LBO / Grow th Equity (Large) 13 2,520.96 1,770.00 2,225.00 2,805.00 Mezzanine LBO / Grow th Equity (Small/Mid-Size) 10 650.52 265.06 632.50 887.50 > Large: firms with $1.0 Billion plus LBO / Grow th Equity (All) 23 1,707.73 785.00 1,625.30 2,429.43 > Small/Mid-Size: firms with less than $1.0 Billion Venture Capital (Large) 12 2,527.76 1,665.50 1,968.08 2,044.98 Venture Capital (Small/Mid-Size) 17 652.09 357.45 746.10 905.00 > All Firms Venture Capital (All) 29 1,575.06 503.00 1,235.00 2,000.00 § Fund of Funds Mez z anine ( Lar ge) 3 1,789.47 1,684.20 1,818.40 1,909.20 Mez z anine ( Small/Mid- Siz e) 6 530.91 421.25 446.50 468.75 > Large: firms with $3.0 Billion plus Mez z anine ( A ll) 9 950.43 425.00 469.00 1,550.00 > Small/Midsize firms with less than $3.0 Billion Fund of Funds (Large) 5 6,481.71 5,588.60 5,900.00 6,400.00 > All firms Fund of Funds (Small/Mid-Size) 6 1,364.13 547.32 1,687.50 1,878.75 Fund of Funds (All) 11 3,690.30 1,687.50 2,700.00 5,744.30 § Co-Invest/Secondary – same as LBO/VC/Mezz Real Es tate/Corp V enture/Debt (A ll) 6 1,289.75 461.75 652.50 1,480.45 § Corp Venturing//Real Estate/Debt(Catch all - All firms) Secondary/Co-Investment (Large) 6 3,769.93 1,687.50 3,810.35 5,880.18 Secondary/Co-Investment (Small/Mid-Size) 6 528.12 305.78 637.50 731.25 § Institutional – same as LBO/VC/Mezz Secondary/Co-Investment (All) 12 2,149.03 656.25 1,202.45 2,805.18 § All Firms (includes all investment types as described above) Institutional (Large) 10 3,062.07 1,782.10 2,350.00 3,349.19 Institutional (Small/Mid-Size) 7 439.76 200.62 500.00 663.55 Ins titutional (A ll) 17 1,982.29 600.00 1,550.00 2,700.00 All Firms 107 1,841.77 503.00 1,378.00 2,000.00

© 2018 by Holt Private Equity Consultants, MM&K Ltd. and Buyouts Insider. All Rights Reserved Private Equity and Venture Capital – North America Report Page 8 Scope and Methodology PART 3. Sections V - VII: Compensation Data

PART 3. Sections V – VII are the quantitative or "How Much" sections of the report. We collected and analyzed data for various positions on salaries, bonuses, and carried interest distributions. It also covers carried interest as a percent of the fund and as “dollars at work” from both “most recent fund” and “all active funds.” Although this data was collected in 2017, we believe it is useful for 2018 budgeting purposes. The table below is an example of the exhibits we provide to summarize data collected on Part 3 of the survey report.

Sample Tables: PE 02. Senior Partner / Senior Managing Director (s) – All Private LBO, VC and Mezzanine combined (Details in full report)

Base Salary ($000) Salary + Bonus ($000) Carry Dis tribution ($000) Job Title # Firms Avg. 25th 50th 75th Avg. 25th 50th 75th #Firms Avg. 25th 50th 75th LBO/VC/Mezz (Large) 42 889.1 340.0 550.0 1,300.0 1,268.1 692.5 1,300.0 1,567.8 24 2,043.4 903.9 2,283.8 2,706.0 LBO/VC/Mezz (Mid-Size) 14 589.0 387.5 555.7 779.4 873.3 602.7 800.0 1,062.5 6 555.7 143.3 564.0 966.0 LBO/VC/Mezz (Small) 7 377.1 320.0 350.0 425.0 541.2 361.6 450.0 750.0 1 - - - - LBO/VC/Mezz (All) 79 697.2 350.0 500.0 717.5 1,061.9 642.1 825.0 1,460.0 34 1,715.4 765.5 1,100.0 2,485.9

Carried Interes t Job Title # Firms % of Most Recent Fund Dollars At Work Most Recent Fund (Millions) Dollars At Work All Active Funds (Millions) Avg. 25th 50th 75th Avg. 25th 50th 75th Avg. 25th 50th 75th LBO/VC/Mezz (Large) 47 2.1% 1.4% 2.1% 2.4% 13.4 7.7 10.9 21.0 43.0 28.2 37.3 50.9 LBO/VC/Mezz (Mid-Size) 8 2.9% 2.4% 2.9% 3.5% 8.2 5.2 9.4 9.4 26.5 21.9 29.9 30.2 LBO/VC/Mezz (Small) 4 1.7% 0.4% 1.5% 2.8% 6.9 6.0 7.1 7.9 11.1 7.7 8.5 11.9 LBO/VC/Mezz (All) 61 2.1% 1.4% 2.1% 2.4% 12.1 7.0 9.1 15.0 38.1 19.6 33.6 47.4

© 2018 by Holt Private Equity Consultants, MM&K Ltd. and Buyouts Insider. All Rights Reserved Private Equity and Venture Capital – North America Report Page 9 Scope and Methodology PART 3. Section V - VII : Compensation Data

Levels Of Compensation: For each sample statistic we typically show average, 25th percentile, median and 75th percentile. Always bear in mind that the average could be influenced by particularly high or low data points in the sample, especially if the sample size is small. Most firms that use compensation surveys set compensation targets between the median and the 75th percentile.

Firm-Weighted Data versus Incumbent-Weighted Data: Compensation reports based on employee surveys may show data on either an incumbent-weighted or a firm-weighted basis. Incumbent-weighted samples simply include all employees in the sample, even if a significant percentage of them all work for the same firm; the results may therefore be unduly influenced by one or more firms and won’t be representative of the overall marketplace. We can correct for this potential flaw by calculating the data on a firm-weighted basis. For example, assume there are 10 firms in a survey and nine firms have one incumbent on a position and one firm has 10 incumbents. The firm with 10 incumbents would affect over 50% of the data. However, if we average the 10 incumbents in the one firm and treat them as one, we eliminate this issue. (When we combine all sizes of data, we modify between the employee and firm data by weighting small firm data once; mid-size data twice; and large size data three times.)

Mix of Compensation Types: In our employee compensation tables we show salaries; salaries plus bonuses; and carried interest distributions. However, firms in our samples may view the mix of these compensation components in different ways, and give more emphasis to one or the other. Venture firms tend to pay high salaries and low bonuses, while buyout firms, with their roots in investment banking, tend to pay lower salaries and larger bonuses. Most firms see carried interest as the most important compensation component – at least for higher level employees – as it rewards long-term positive performance on behalf of the firm and its investors. In light of this, well-established firms whose partners already have a high net worth may well pay relatively low salaries and/or bonuses. This of course can vary based on the amount of management and other fees that are received as revenues.

Carry Distributions Historically, we have added carried interest distributions to salary plus bonus. There is a “flaw” in this approach because many firms do not report the distributions. They may consider the data confidential or simply do not wish to take the time to report them. Thus, if 10 firms report salary plus bonus, but only five of them report distribution we still have been dividing by ten to obtain salary plus bonus plus distributions. Starting in 2014, we do not add the distributions to salary plus bonus. We show the distributions separately but only for those that reported a distribution. (From our above example, we divide by five rather than ten). Firms can decide for themselves how to use this data.

Carried Interest Plan Allocation: Where applicable, we show three carried interest allocations. The first is the percent of the most recent fund allocated to each employee as carried interest, also referred to as carried interest points. Employees typically share the 20 points of carry allocated to the GP, although a portion may be allocated to a parent company, or held in reserve for future hires and promotions. We also show the carried interest “dollars at work” for the most recent fund, which is the carried interest points assigned an employee multiplied by the size of the fund. For example, a partner with 1 point of carry on a $100 million fund has $1 million at work in that fund—in other words, the dollars at work that can result in realized investment gains. We also show the most important feature of carried interest - the dollars at work for all active funds.

© 2018 by Holt Private Equity Consultants, MM&K Ltd. and Buyouts Insider. All Rights Reserved Private Equity and Venture Capital – North America Report Page 10 Scope and Methodology PART 3. Sections V - VII : Compensation Data

PART 3. Sections V - VII. Firm Classification: For our analysis of employee compensation starting in Section V of this report we created 29 samples, Studied Positions: described below. Institutional firms (groups sponsored by banks or other large parents) are included in these samples unless otherwise noted. Job descriptions for all the position listed below (30 positions) § LBO/VC/Mezz: Combines LBO / Growth Equity, Venture Capital, and are included in Section VI of this report. Mezzanine firms. Investment Professionals Large: $1.5 Billion or more § Managing General Partner(s) / CEO Mid Size: $500 Million – $1.5 Billion § Senior Partner / Senior Managing Director(s) Small: Less than $750 Million § Partner / Managing Director(s) / Portfolio Manager § Principal / Vice President / Director(s) All Firms § Senior Associate(s) § LBO / Growth Equity – same as LBO/VC/Mezz § Associate(s) § Venture Capital – same as LBO/VC/Mezz § Senior Analyst(s) § Mezzanine § Analyst(s) § Venture Partner/Operations Partner Small/Mid Size: Less than $1.5 Billion Administrative/Support Large: $1.0 Billion plus § Chief Operating Officer (COO) All Firms § Administrative/ Office Manager § Fund of Funds § Executive Assistant § Small/Mid-Size: up to $3.0 Billion Secretary/ Administrator § Receptionist Large: $3.0 Billion plus Finance All Firms § Chief Financial Officer (CFO) • Secondary/Co-Invest § Controller Small/Mid-Size: up to $1.0 Billion § Assistant Controller . § Senior Accountant Large: $1.5 Billion plus § Junior Accountant All Firms § Fund Accountant § Corp Ven/Real Estate/Debt – All firms Marketing and Investor Relations § Institutional § Chief Marketing Officer/ Head of Marketing Large: $1.5 Billion or more § Marketing Manager § Investor Relations Director/ Head of Investor Relations Small/Midsize: Less than $1.0 Billion § Investor Relations Manager All Firms Legal, Human Resources and Information Technology § Canada – All Firms § Chief Legal Counsel § Asia Pacific § Compliance & Risk Officer § Small/Mid- Less than $2.0 Billion Chief Human Resources/ Talent Officer § Human Resources Manager Large: $2.0 Billion plus § Chief Technology Officer All Firms § Information Technology Manager

© 2018 by Holt Private Equity Consultants, MM&K Ltd. and Buyouts Insider. All Rights Reserved Private Equity and Venture Capital – North America Report Page 11 Scope & Methodology Partial Participant List (Certain firms have requested anonymity)

VENTURE CAPITAL LBO/GROWTH EQUITY FUND OF FUNDS INSTITUTIONAL 5AM Venture Management Adams Street Partners, LLC 57 Stars BlackRock Private Equity Partners Adams Street Partners, LLC Alterna Capital Partners Abbott Capital Management, LLC Clairvest Group Inc. Amadeus Capital Partners Ampersand Capital Partners BlackRock Private Equity Partners F-Prime Capital Partners (Fidelity) Anthemis Ascension Ventures C.M. Capital Corporation Google Capital (Capital G) Ascension Ventures Clairvest Group Inc. Glouston Capital Partners Google Ventures Asset Management Ventures DCM Ventures Manulife Financial Guardian Capital Partners August Capital Emergence Capital Partners Portfolio Advisors iNovia Capital Charles River Ventures, LLC Encore Consumer Capital RCP Advisors 3 LLC Manulife Financial DCM Ventures Fremont Group Renassance Venture Capital Fund Norwest Equity Partners Emerald Technology Ventures Google Capital (Capital G) Rand Capital Norwest Mezzanine Partners Emergence Capital Partners Great Hill Partners, LP TrueBridge Capital Partners Norwest Venture Partners ePlanet Capital Guardian Capital Partners Twin Bridge Capital Partners Rand Capital F-Prime Capital Partners (Fidelity) HGGC, LLC Silicon Valley Bank Google Ventures Industrial Growth Partners SECONDARY/CO-INVESTMENT/ Triple Tree Capital Grotech Ventures J.M.I. Equity 57 Stars Icon Ventures Linden Capital Partners Abbott Capital Management, LLC CANADA iNovia Capital Lovell Minnick Partners LLC Adams Street Partners, LLC Clairvest Group Inc Institutional Venture Partners Norwest Equity Partners BlackRock Private Equity Partners Emerald Technology Ventures Longitude Capital Proterra Investment Partners Glouston Capital Partners iNovia Capital Madrona Venture Group, LLC Rand Capital Manulife Financial Manulife Financial Massachusetts Capital Resource Company Tecum Capital Portfolio Advisors Norwest Venture Partners Triple Tree Capital RCP Advisors 3 LLC ASIA/PACIFIC Open View Advisors Vivo Capital, LLC TrueBridge Capital Partners Adams Street Partners, LLC Pappas Capital, LLC (Pappas Ventures) Water Street Healthcare Partners LLC Twin Bridge Capital Partners BlackRock Private Equity Partners Portfolio Advisors ePlanet Capital RiverVest Venture Partners MEZZANINE Google Capital (Capital G) Scale Venture Partners Avante Mezzanine Partners REAL ESTATE/CORPORATE VENTURE/DEBT Manulife Financial Silicon Valley Bank Boathouse Capital Alterna Capital Partners Norwest Venture Partners SV Health Investors, LLC Manulife Financial Ascension Ventures Portfolio Advisors Third Rock Ventures Massachusetts Capital Resource Company Fremont Group Proterra Investment Partners TL Ventures Norwest Mezzanine Partners Manulife Financial Vivo Capital, LLC Trident Capital Cybersecurity Management LLC Portfolio Advisors Portfolio Advisors Vivo Capital, LLC Tecum Capital Yukon Capital Partners

R. Michael Holt (Mike) Damien Knight and Nigel Mills David M. Toll and Joseph Weitemeyer [email protected] [email protected] [email protected] (239) 594-5530 +44 20 7283 7200 [email protected]

Holt Private Equity Consultants specializes in MM & K is a leading independent remuneration Buyouts Insider is the leading source of news, assisting clients with private equity/venture consultancy specializing in the planning, design and data and analysis for the world’s private equity capital organizational and human resources implementation of pay and reward strategies. professionals, providing customers with issues, which includes compensation and Founded in 1973, MM & K is based in the City of competitive intelligence. We publish magazines, performance management. The Holt firm has London and mainly focuses on executive and employee e-newsletters, and web sites; host webinars and designed numerous carried interest and co- reward strategies and structures. In recent years we live PartnerConnect events around the country; investment plans, as well as annual incentive have added other services to support our clients’ needs and offer custom publishing services. plans. It also has consulted with various real through the acquisitions of Independent Remuneration estate and investment/funds management Solutions and the launch of higher talent, our specialist Through some 25 employees across the country, organizations. recruiter of HR and reward professionals. we deliver market intelligence to the private Over the years MM & K has built up a huge amount of equity markets, powered by the world’s most talented team of private equity and venture He has been an “expert witness” on numerous knowledge and experience in the private equity and capital reporters and editors. occasions. venture capital arena. This year will be the sixteenth consecutive year that we have conducted a pay survey For the past 30 years, Buyouts Insider and its in the UK / European Private Equity sector. In addition Prior to founding Holt Private Equity predecessors have been supplying valuable data, to the knowledge that we have gathered based on our Consultants in 2001, Mike Holt was a consultant news, and analysis to private equity and venture Private Equity Surveys we have also advised more than with William M. Mercer, KPMG, and Hay capital professionals around the world. Its 40 different PE houses on their own pay and reward Management Consultants, where among other flagship products include the bi-weekly Buyouts things he conducted private equity/venture strategies over the last ten years. Magazine, the monthly Venture Capital Journal, capital compensation surveys. Previously, he We put into place strategies that ensure client the daily peHUB Wire and the Investment was head of compensation and employee remuneration programs are integrated with business Benchmarks Report series of market intelligent benefits at Norwest (now Wells Fargo) and for goals. Experience shows us that when a business studies of industry returns, partnership terms and achieves this integration, the overall competitiveness Pillsbury (consumer products). conditions, and employee compensation. Buyouts and value of the business increases substantially. Insider also recently introduced a guide to family Our consultants’ expertise areas include reward offices. Mike received his undergraduate degree at the strategies, HR, share schemes, law, accountancy, tax, University of Notre Dame and a Masters Degree corporate governance, business management and in Business Administration from Roosevelt statistics. University. He also served as a Lieutenant in the MM & K is owned by its employees and directors. U.S. Army. MM & K Limited is authorized and regulated by the Financial Services Authority.