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.