With the IPO of Blackstone (NYSE: BX), there's been lots of talk about the eye-popping compensation of some of its key principals. In fact, Congress is thinking of imposing higher taxes on the private equity industry.To get some perspective on things, I interviewed John Ryan, who is the president of RSMR Global Resources (which is a retained executive search firm). He has extensive experience with banks, financial institutions and private equity (PE) funds.
What's your take on the Blackstone compensation? Normal for private equity?
From what I have seen, Blackstone's compensation has been in line with other major city private equity firms.
Blackstone has definitely been top quartile to attract the individuals they have been able to hire, most of their folks have top ten MBA's and bulge bracket investment banking experience.
How might public offerings of private equity firms impact compensation?
Well, compensation would be more public, under more scrutiny, so I can see high compensation getting challenged or at a minimum discussed. Public companies are under much more pressure to hit earnings targets, which could also potentially lower compensation going forward.
What's the environment for hiring in private equity? Tough to find talent?
I think the private equity space attracts strong individuals by dangling strong compensation packages in front of potential hires. In fact, many private equity firms are particular, as there are many bankers who would love to move over to the principal side. The environment for hiring experienced private folks is tough, only because most of these individuals have carried interests in funds, and so PE firms are looking at creating high dollar packages to buy someone out of the big payout or payouts that they are leaving.
Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.
Closing Bell: Economic Catapult for Thanksgiving & Black Friday (WMT, TGT, GRMN, GOOG, MSFT)
Deere up on Q4 earnings performance
Reid Hoffman: LinkedIn will go public (at some point)
