SPEAKER_02 0:09

Something different on the podcast this week. Um, the team here, who I'll introduce uh in a minute on the on the private equity side of infrastructure and the energy transition, has been thinking a lot recently about compensation, uh, specifically uh occasionally asked to write bespoke reports for some of our clients, and they've been involved in the weeds of that. And that brought this into uh conversation. And I just thought this is a uh a real theme at the moment. A lot of people want to know about this. Um, what's going on, what are the things, what are the trends, and what are the factors that are affecting those trends? So, could not bring a better group of people together to talk to you about that. We've got Liam Dunn, uh partner of OneSearch, based over in London. Harry Buss, principal, works very closely alongside Liam, and Rebecca Miles, who leads the practice, which is the equivalent practice basically over here in the States with me in New York. Um, we're gonna jump straight in. Uh, Harry, I'm gonna come to you first. I just want to understand what are the factors, there's so many different factors, aren't there, that drive compensation disparity? And we've got infrastructure investors out there that work for all these different types of funds. Uh, as uh search professionals, we are used to having conversations with these folks, whether comparing themselves to other people, and they say, Well, I've got a friend who works here and he gets paid this or she gets paid that. Tell me in in your mind, Harry, what what are the factors that drive this compensation disparity? Yes.

SPEAKER_01 1:40

So there's a few factors which inform compensation. Some of them have a greater weighting on annual cash and others on carry and LTIPs. The first of those is where the manager is headquartered. Uh US and particularly New York headquartered managers tend to pay more than London, which tend to pay more than continental Europe in annual cash, certainly. Secondly, total AUM. Thirdly, AUM per headcount. And then exactly where their strategy or strategies are positioned within the market. So how large the funds they're raising are, where the sweet spot sits for equity checks and geographies and sectors that they're investing in, as well as the return profiles they're seeking.

SPEAKER_02 2:24

So d does it follow then? I mean, why is it that a New York-based or a US-based infrastructure investor just necessarily pays people more than one based in London or continental Europe or somewhere else? I think it's just compensation cultures.

SPEAKER_00 2:39

Um by definition, Europe is a bit more conservative, I'd say. And I think if you think about where infrastructure investment originated here, a lot of it comes from the Parisian investors where compensation is naturally a little bit lower and then slowly worked us through through to the London market. And a lot of that, I think, culture is held. Whereas in North America it's such a I mean, I'll let Rebecca come in and talk about this, but it just feels like a s such a competitive transactional, high performing ecosystem compensation has only moved in one direction, and I think that hasn't quite fed its way through to London, um, at least in form of cash compensation.

SPEAKER_03 3:23

And there's some divergence when you look at the different levels there as well within these teams. So I think you'll see a little bit more comparable, especially on the cash and carry comp when you're looking at the partner managing partner ranks, whereas when you look at the associate to VP, it's a little bit more commoditized. Hiring at the associate level, and the associate comp is a little bit more market standard, certainly above Europe at the kind of junior levels in the US, but a little bit more standardized, you see the real um yeah, change happen when you get into that kind of MD partner at senior partner level.

SPEAKER_02 3:52

So to Harry's point, if a firm is headquartered in the States, but you're working in the London office, just by virtue of your firm being headquartered in the States, you're being paid comparatively more than than your peers in a in a European firm.

SPEAKER_01 4:04

Absolutely, but the differential is almost all in the bonus. So in London, it's not uncommon in US headquartered firms to see at the director level and above, but in particular at the managing direction level and above, bonuses paid out at multiples of basic salaries. Whereas in UK headquartered firms, it's rare. And in European, continental European headquartered firms outside a very small number of um outlying examples, it's very rare.

SPEAKER_02 4:36

Yeah, I um, you know, I think there are many in in doing a podcast around compensation, as opposed to just sending out annually, here's a grid that says here's the range of your compensation, which is just doesn't take into account all these nuances. I think, you know, one of the things we need to talk about is that the actual performance of the organization that you work for. And what, you know, that that and I know this was something that you've picked up in one of the reports that you that that you wrote recently was around you know the disparity in fund performance and how that's driving compensation. Can can we can we talk to that?

SPEAKER_00 5:12

Yeah, it's um it's an interesting point. If I think back to uh the pre-COVID era, investor bankers would almost see private equity as a more stable shot from a base of bonus perspective. They are their their fee generating AUM. You kind of know where your total cash comp is going to be year on year regardless of individual performance. I think what's happened in the post-COVID era, um the disparity in fund performance has become far broader. Even within the the large cap players, the top 20 inter funds that you think of um instantly. And what that's meant is it's exposed, I'd say, weaker performers across the board. So what we're seeing is a disparity in at least with the bonus, um is far greater than it was maybe two, three years ago. Top performers, it's not uncommon, I'd say even in in Europe, Harry, to be paid multiples of their base salary in bonus, especially the more senior you get. Whereas I'd say average or lower call-to-performers, I've even heard of instances where people are paid donuts, which I'd say three, four years ago was unheard of at primarity.

SPEAKER_03 6:14

Rather than being more formulaic of, oh, it's a hundred percent or a hundred and fifty percent of of base as a as a guidance or as a target, I think there's a lot more of a a deliberate move. We've seen that over here in the States, where there are almost formulas being put into place where are you in the top quartile or second quartile of performers and therefore your performance will be far outsized, versus in in the bottom quartile, in which case your your bonus may be zero. Um, and an a deliberate push to make that incentive clear and known across the firm. So you so you're aware of where you sit in that. And then you have very much outsized at the top end and a bit more of a um a disparity between uh the same peer group, frankly.

SPEAKER_02 6:55

So that that's a point of of through the course of the year, um, yeah, feedback, review, process, where do I stand internally within this organization against my peers, and getting an early view on how am I going to be paid at the end of the year?

SPEAKER_03 7:08

Exactly.

unknown 7:09

Yeah.

SPEAKER_02 7:10

And that's and that's going on now within Infrafut.

SPEAKER_01 7:13

I think if you compare in the infrastructure to other private markets asset classes, investors do a relatively small number of deals. And the larger the fund, the larger the deals that they're doing, but the total and the the larger the teams are that are managing and investing their capital, but the total number of deals doesn't necessarily scale with that. So it means that the deal sponsor on any particular transaction is particularly valuable. And it and it means that actually one individual can generate far more value for a single investment vehicle or a you know a family of investment vehicles that a manager has in their in their overall portfolio. And so and that's really been recognised in recent years as there's been a lot of underperformance and some excellent performance. And that in turn drives a this differential as well.

SPEAKER_02 8:08

So disparity in performance and uh and and coming back to you there, Harry, in does this mean, and I put this to the group of you because you're dealing with people, I mean, I I guess at VP level is where people come into the uh the purview of OneSearch, and then you'll place in established VPs, directors, principals, MDs, and all the way up to the very most senior positions within these organizations. Does it does it therefore follow that people that are introducing themselves to you or that you're meeting as prospective candidates to move them uh either to an infra fund to a different uh infrastructure investor, all now want to go and work for those big shops where we've seen that concentration of capital, where they imagine this the this is where the success is going to be. A lot of them are tier one American brands, not exclusively, but some of them are. Is this what you're finding that people feel that that's where the the compensation's gonna be? That's where I want to be.

SPEAKER_00 9:04

For sure. I'd say um, again, not across the board. Sometimes you have these entrepreneurial spirits that want to go and do something a bit riskier. But I'd say it's not just about are these the platforms that can pay? I think they're the only ones that have the resource to pay, given how much capital they've been able to raise. It's also uh a safer bet for these individuals to to think about joining these platforms. Um where am I going to be best placed to do deals over the foreseeable futures, the firms that can raise the most capital on a consistent basis? Whereas I think the risk associated with joining a a middle market investor or let's say a first-time firm these days, um, is a little bit too high. And if you're uh a deal captain or you're stepping up to become an originator, the worst position to be in is within a platform without any dry powder or capital. So I think that's a huge part of why um I wouldn't even say top performing individuals, but just investment professionals, broadly speaking, are gravitating towards the large cap players.

SPEAKER_03 10:00

To give a bit of the flip side of that, though, I would say there's some hesitation depending on what sector area you cover or what the kind of broader appetite within that large cap vehicle is to kind of really expand or kind of grow in that sector. There are some hesitations typically around, okay, the larger the deal sizes, the smaller the competitive, you know, um manager landscape is. So are there is there going to be a deal, even a deal a year, or am I going to be sitting there for two, three, four years on a single transaction? So there's when it comes to appetite to kind of deal flow and deal volume, I think the mid-cap does tend to beat them out there pretty significantly. And then when you look at the kind of broader compensation centered packages, the the argument for the mid-cap is you get a larger percentage, right, of the total carry pool. Now, it's not necessarily going to beat out the broader dollars at work if you have a large cap manager with multiple products and different allocation possibilities there, but you get a more significant percentage of the carry pool in the mid-cap manager and more influence on the performance of that manager through your deal fly. So there's kind of a back and forth. I would say the aggressive hiring at the mid to kind of senior mid-levels is definitely heavier at the large caps right now, but at the more senior end, um, I think there's still a good appetite or good interest in going to some of these kind of slightly smaller managers where there's more influence.

SPEAKER_02 11:22

Well, that's right, because they might have seen one of the you know the exclusive one such compensation reports that tells them how much managing partners get paid. And we're not uh you know, we're not gonna not gonna start quoting too fine detail on this, but managing partners get paid a lot, don't they? I've seen this. And um, even I was a bit surprised, but when when the data came in. So if I'm a guy who works for a big shop, uh realistically, I'm yeah I'm good at my job, I've made some great investments, but I'm never gonna be the managing partner. If I'm at Blackstone and I'm one of you know X number of MDs, probably not gonna be the managing partner, but I want to be the managing partner somewhere. So I'm either I'm thinking of making a move to a uh a mid-level shop or going and starting something on my own. If I'm to Liam's point, I'm an entrepreneurial spirit, I want to go and build something, but I've got to I've got to hire my initial team and I've got no money. And I'm out there in the market trying to pull pull money together. At the same time, I'm only gonna really get LPs behind me if I can show I'm gonna have a team. So how do I attract the talent? Or can't I? What do I have to do compensation-wise to get people to agree to come on board with me? Take that risk. Yeah.

SPEAKER_03 12:26

Well, GP economics goes a long way.

SPEAKER_00 12:29

It does if the change's worth something. Um I'd say do you know what it's it's about trying your hardest to strike the balance between paying competitive cash compensation. Because I think even in this market where there is such a such an emphasis on Carrie, um, I'd still say there's given this kind of disparity of fund performance which we've been talking about on this call, I'd almost say carry, even though candidates negotiate with carry, that's the leading negotiating point. I still think it's seen as this if it comes great, fantastic, amazing. But I'm not going to bank the next decade of my life on this quote unquote pipe dream that may or may not come in. So I need to secure my annual cash. And I think that's where startup funds, unless you come through or come off the back of a carry payout or come off the back of an event where you can live without a paycheck for the foreseeable future, it the risk is a little bit too high. Um, so I'd say that's the most difficult thing about attracting a high quality team into a a newer entrepreneurial platform, is being able to provide cash comp to keep them motivated in the short term and then still be able to match them with a carry allocation to just almost keep them bought in. I think that's the way that I think about carry for a startup, was keep them engaged and committed for the procedure.

SPEAKER_03 13:42

And a lot of it, especially if you're at the mid-level or kind of junior mid-level, you're you're joining this team, there is far more up mobility, right, in that scenario. So much quicker. Now, again, presuming everything is successful in terms of fundraising and actually getting a product up and running and getting the team behind you. But if you're a you know a VP that's one of multiple on a large cap deal sitting in one of these big funds, versus you get to be the main deal captain and very quickly have exposure to LPs and the fundraising side, the product strategy, the deal sourcing, the product relationship building, that is a much more um accelerated path for someone in their kind of mid-level of investing. So, um, and the volume of deals you're looking at, again, um that's one of the bigger frustrations when you look at kind of VPs and directors across the market right now, they may not have executed a single deal over the past two or three years, and that really limits their mobility. So I think there is that that kind of toss-up, but agreed on the carry front, there needs to be some outsized uh portion there to take that risk essentially.

SPEAKER_02 14:40

I totally agree. On the again, I think that is the entrepreneurial spirit as well, though, isn't it? Is the the entrepreneurial spirit is if I come in at the ground level and then this vehicle does brilliantly well, I've backed the founder. That hopefully the the reciprocal arrangement is going to be, I'm now gonna progress really quickly. They're gonna trust me, they're gonna be, you know, frankly, slightly beholden to me for for having um coming back to help them get it off the ground. And that's where you see that rapid, hopefully rapid career trajectory. And what comes with that is rapid compensation trajectory. But what it still comes back down to is having the entrepreneurial spirit, being prepared to take a measured risk.

SPEAKER_03 15:17

And being okay, not being on the market leading deals in whatever sector you're looking at, right? You're not gonna be, you know, in in the most competitive large cap deals across the market. You're going to be doing slightly more, you know, creative, maybe, or smaller ticket deals. Um it really depends kind of what your personal preference and priority is there.

SPEAKER_02 15:35

You're gonna be doing scrappier stuff.

SPEAKER_03 15:36

Yeah.

SPEAKER_02 15:37

Potentially, while you while you get the platform to where it's going.

SPEAKER_03 15:40

Exactly.

SPEAKER_02 15:41

But in amongst that scrappy stuff, there can be some you can find some some some rough diamonds, can't you?

SPEAKER_01 15:47

I suppose buy into the platform based on the track record and credibility of the founder or founders, and you build a um a belief that if you buy into them LPs will as well, you'll quickly be able to formulate some capital, have some fee paying AUM, and actually be able to take home a decent paycheck. But if if you're a a founder of an emerging manager, until there's something that you can point to in terms of this is where the capital is coming from to invest, you're not going to be able to hire top performers unless they're coming in as co-founders with a you know a slice of the economics which could be life-changing when that wealth creation event comes.

SPEAKER_02 16:29

I just want to come back to this point that I thought was really interesting a minute ago that that Rebecca made around uh GP equity. And uh and then you know, Liam's point, well, you know, if the GP's worth something, but that's the bet you're taking. Because you're not, you're not, if you're a more junior person, especially, you're not getting GP equity later on down the track. A lot of people are not getting GP equity further on down the track. That in that early formation stage is is when you might you might come to the table and get it. And that so you're taking a bet on it being worth something one day. On day one, it's probably is literally worthless. For me, when I started out in this um industry, carry was the big buzzword. You know, junior level, mid-level people, everyone, frankly, carry was just such a sexy word. Um, you know, it's kind of funny to see how that's evolved over 20 odd years to the to the place where it's kind of like, you know, uh carry in itself doesn't get people excited. I think that's partly because we had so many stories over the years now where people in the infrastructure world, it was a brand new thing. Infrastructure funds were a brand new thing when I was starting out. So we've had so many, we've had time for the miserable stories of worthless carry to play through, and people who made these big bets and took sh took maybe um sacrifices on their annual compensation because they really believed that their carry was going to be worth loads and then it wasn't. But I think it's also because we've we've seen people um realize that, and and there have been some events with we don't need to name any names, but some funds who've um crystallized the value of their GP, and that's where generational wealth has has been realized. And we've seen infrastructure investors, we used to think it was unbelievable if we saw an infrastructure investor that was worth tens of millions, we've now got infrastructure investors who are billionaires. Um, and that tends to be where that's come from. So look, Harry, give it give give us a view. Obviously, we're we're concerned in mid-level to the most senior levels of hiring, but there has been an observation, hasn't there, around the junior level that in terms of at what point people come into the carry.

SPEAKER_01 18:33

Yeah. So historically, associates didn't tend to join infrastructure funds with carry allocations. And that that really began to change around the time that I joined OneSearch when there were some sort of meaningful purveyors of Core Plus or what would probably now be considered value-add infrastructure investments in Europe allocating Carrie to their junior hires.

SPEAKER_02 18:58

And I remember that was your first just to date that, Harry, that was your first tour of duty with OneSearch, was it?

SPEAKER_01 19:03

That was my first tour of duty with OneSearch. So for 2017, 2018, something like that. And and and just around the end of my first tour, it became the majority of independent GPs would allocate Carrie to associates. And it was almost exclusively the case at the Vice President level that new joiners would have carry and individuals as they were promoted to the VP level would get carry, and it would be a meaningful amount. What we have seen in recent years is investors dialing back on that trend and actually it becoming less and less common for associates to be allocated carry upon entry or until their next promotion, and the value of that carry, when annualized against that annual cash compensation being lower. Whereby in the market right now, in Europe, at top-tier GPs, on an annualised basis, carry is less than half of annual cash compensation at the associate level. Whereby it is multiples, and we're talking um 10, 20x once you get up towards the top of the house.

SPEAKER_02 20:14

And and and is is that, do you think, because because firms have realized that it's just not really a very uh um it's not really a very effective attraction mechanism for younger, more junior people. They're not really necessarily thinking that longer term. Bex, is that is that why that we're saying this?

SPEAKER_03 20:34

Yeah, I think it depends on the horizon you're looking at, and especially when you're two, three, four years into your career, the the 10, 15 year horizon may not be the main incentive tool to keep your head down and keep you there. Um, cash is is certainly a higher driver, higher incentive, and and the strategy that you're working with in the mentorship that you're getting, the track record that you're building alongside that team tend to all be higher conviction points for them. So, as Harry said, if you've got 50% of your base in a carry mechanism, which you may not see for 10, 12 years from now, um, if it's in a a European waterfall structure, that's not really the highest, you know, retention tool. Again, once you get into the kind of VP director MD ranks, that that quantum, it grows significantly. And then the time horizon to exit, you're you're further along that that course. Um, but the majority of associates that our team on the Infrasoc side are speaking with don't have carry in the first place. And the main thing they're negotiating for when they move is not carry. It is a higher cash compensation with line of sight to carry at the kind of VP, the VP level. But they are there is higher movement at the associate level. So that that's less of a a buyout concern, especially when it doesn't actually exist in their the package today.

SPEAKER_02 21:54

Yeah, I mean I've I've and this is a plug for infrastructure. We should we should have had someone from Infrastructs, which is our our brand. Doing very well, got to say, uh, a couple of years in since foundation focused on that associate level hiring, uh, which is a slightly different product, uh, yeah, understandably uh tackled in a in a slightly different way to our approach. But you know, you see associate we're privy to that, we see that through Infrasox, associates moving who have carry and just leaving it behind and going to another organization where they don't, because frankly, it just wasn't that good of a retention mechanism either. Yeah. Uh, let alone uh attraction. So the juniors are getting squeezed on the carry. Maybe firms realise it wasn't that important to them anyway, and they're focusing that carry on the senior end. As uh Liam, tell us something about that at the senior end. So I've seen some of the numbers on this that you've been uh uh dealing in recently, and we've we've we've got some huge carry packages out there.

SPEAKER_00 22:53

Yeah, I mean the they're enormous. Um for the the top performing managing director, managing partners um across the top infrastructure funds, we're seeing huge carrier awards. We're talking packages north of $150 million worth of carrier work for individuals across two or three different awards. Um that's a huge A alignment of centres, but also retention mechanism to keep your top performers intact. One thing I just wanted to say about the junior level that Bex was talking about is I also think of another dynamic which is causing the juniors to get squeezed are GPs holding back some of the carry in order to basically attract top performers out of other shops. So when you're thinking about, oh, I've got X amount of carry at work, could my vested portion be forfeited if I join a competitor, what can you do to make me whole? I think a big part of why we're seeing the juniors carry held back, um or squeeze rather, is to save some of their um most recent carry pot for new joiners.

SPEAKER_02 23:55

Yeah, okay. That's I mean, so so it's essentially we've got carry wars at senior level between infra funds. There's a squeeze on the top talent, identification of who the top talent is and what does that really mean. But in in attracting the top talent, we've got funds that are um using everything they can carry-wise to bring top performers on board.

SPEAKER_03 24:19

And often they're um awarding prior vintages of carry or accelerating vest schedules of carry to make that a more enticing move. Obviously, at the MD partner level, wherever you're moving from, you'll be leaving behind a significant amount of unvested carry. Um, if you're a good lever, you tend to get to retain the vested as long as you have your weight up period or at least a portion of that vested. But even going into some of the vested carry, um, that needs to get bought out if there are provisions that you don't get to retain that, right? And often some of the large firms right now are trying to accelerate the hiring timeline. So the quicker they can have someone in the seat, the better. Um, and that can mean losing your vested carry by forfeiting your non-compete. Um, so they need to have all those available tools to them, whether it's carry, whether it's um stock, whether it's kind of broader, accelerated vesting schedules, all of those different levers to pull um to draw in this kind of highly sought-after, expensive senior talent.

SPEAKER_02 25:20

So so we've reached a place, haven't we, where infrastructure funds, if they want the top senior talent, need to understand it's probably reached a stage of maturity that the broader private equity market reached a long time ago. If you want to bring across a top player, there is a very significant price tag attached to that. Because if they are a top player at the C in the in the senior market, they're going to have it's almost a red flag if they have a built up a position in terms of the value of their carry that they're walking away from. Unless you get tremendously lucky uh with regards to timing, it's now just become a fact of life that to hire the top people you're looking at buying them out of carry packages in the tens of millions of dollars. Absolutely.

SPEAKER_00 26:07

Yeah, through our recent efforts, we've seen multiple examples of this of this being the case. Um in different ways and different functions, I think. Rebecca mentioned earlier, um uh it maybe it might it could be a combination of stock, carry, cash, um, different levers that platforms can pull to make people whole. But yeah, the quantum can be in excess of 10, 20, even 30 million.

SPEAKER_02 26:32

And if a firm says um and you're trying to work with a uh a client as you do and trying to be creative around that, and they say, look, there's a real limit on what we can do and how you know what we can what we can do to buy someone out. What of the other mech are there any other mechanisms that they can say, well, we can offer you this. Here's what we can do to make it more attractive uh to come across to us.

SPEAKER_03 26:55

It depends on the manager you're talking about, but when you are looking at the larger cap names, one of the biggest levers is access to multiple products. And so then you start thinking about total dollars at work, not just your carry allocation. Um, so you get to co-invest alongside, for example, their PE vehicle or the private credit vehicle, um, and you have pretty attractive leverage schemes in place to go out and do that. Um, and so you're not limited in a single strat way to only have that single product in infrastructure, whether it's you know, Core Plus or value add, um, there still tends to be a lot of interest to have access to the more traditional private equity vehicles out there. So that tends to be a big lever and then the ability to kind of create larger wealth generation through those vehicles versus just the standard education that you'd be given.

SPEAKER_02 27:42

That's that to me sounds like a win-win because if you're if you're a firm and you've got senior uh executives within your organization that then feel highly collaborative, they want all these other different products to do well, that feels like a great scheme to have. Allow hire senior people and allow them to co-invest across all your different products. Exactly.

SPEAKER_03 28:02

Yeah.

SPEAKER_02 28:03

But what else, folks? Anything else that we've seen in terms of attraction mechanisms beyond simply sort of high cash and attractive carry schemes. I mean, we've spoken about stakes in the GP earlier.

SPEAKER_00 28:16

I mean, that's a big one for the more senior profile. Um, I think the way in which you finance maybe some of this co-investment is another angle. So I think with some of the multi-strategy asset managers, they can provide GP leverage through like a pick instrument, for example, so you pay the interest at the back end as opposed to on an annual basis. And I think these are things that um, again, a platform, very platform-dependent. Some platforms have these instruments at the means, others don't. Um, but outside of that, if we're being brutally honest, I mean, what are the key things that people look for? What are the key leaves you can pull? It is balancing the short-term incentive with the long term, and in the long term, you're somewhat limited to stock, carry, and GP economics. Yeah.

SPEAKER_02 28:55

That's the that's the point. It's the it's the the you've got to have people that feel motivated for the short term, can pay the bills, can achieve their shorter term personal goals, because they're making enough money to do that, but you know, the the longer-term incentive is also big enough to keep them there.

SPEAKER_00 29:16

The biggest push these days is lower than market cash compensation. We r very rarely hear my carry is weak. We normally hear my baseline bonus is weak compared to the pigment. Biggest push factor across the market.

SPEAKER_02 29:26

And maybe that's a sign of the times with the uh you know inflation and uh and uh you know drastic increase in the cost of living.

SPEAKER_01 29:34

And then also I think we see a continued decentralization from London in the European infrastructure private equity investment industry, and more and more firms either being founded outside of London or opening up offices outside of London.

SPEAKER_02 29:51

That sounds like great news for Andy Burnham. We'll love this.

SPEAKER_01 29:54

He loves decentralisation, doesn't he? A lot of these nations also have very favorable tax schemes, um, both for repatriation and just and just relocation. And so a lot of managers will rely on those to be able to hire senior talent because a lot more and more of the senior moves which we see and assist with and are tracking also involve a relocation.

SPEAKER_02 30:20

So breaking news on the OneSearch podcast, Harry Boss is breaking it, he's seeing an outflow of a brain drain in infrastructure investing from London into continental Europe. So before we close this down, people who tune into a podcast like this, they want to hear some hard numbers. And we're not into giving, we're not into these sort of things that get sent around and say, oh, well, your salary should be between this and this. But they just they do want you to to stick your neck out to some extent. Okay. They I think people understand there's a range of issues, it's very nuanced, it depends on uh AUM and AUM per head and where your uh uh organization is headquartered, ticket sizes, where do you really stand in the market as an organization? But stick your neck out, folks. Um, Bex, if you don't mind, I'll start here in the States, um, where we are. Um if I'm an if I'm an MD working for an infra fund, broadly, what should I be getting paid?

SPEAKER_03 31:16

If you are an MD at an infra fund, I would say cash, you're looking in the 1.1 to 1.5 total cash range when it comes to carry, as you know, a lot of different factors um at play, but in the kind of 15 to 25 million allocation range.

SPEAKER_02 31:35

Okay, so so and then if I if I come across the pond and ask you guys in London, so Beck's 1.1 to 1.5 million dollars is equates to broadly speaking, in and around a million pounds. Right? Is that what it is?

SPEAKER_00 31:52

Is that what I expect if I'm in London? Yeah, well, I mean we'd probably see a range starting from 800 to about 1.2, maybe 1.25, I'd say, this week spot here in London. Um and then actually interesting, it's quite a nice segue. Um, carry awards would be similar. So I'd say what we typically see is there are disparities in cash compensation that carry awards uh tend to be in line across geographies. So it's anywhere from probably at the bottom end 12, 12 and a half, up to about 25 at the top end. Okay. For an individual carry award.

SPEAKER_02 32:30

So look, broadly speaking, I'm here in the same rough range as both sides of the pond, in terms of uh cash compensation and carry allocations, and where you are in that range depends on a lot of those factors that we've already discussed. Harry, I know you love doing work on continental Europe. You've had numerous very successful searches to you name. Tell us how this. So we've got these two relatively uh comparable comp ranges for an MD across across the US and London.

SPEAKER_01 33:01

Is is the EU in line? Well, if if we look at continental Europe and we carve out Switzerland, of course, not part of the EU. Because in Switzerland, on a on a gross basis, investors are taking about the about home about the same as London on a net basis more. But if you look at other major financial centres around Europe, uh a real dichotomy exists depending on where the business they work for is headquartered. So if the business is headquartered in the US or the UK or even um overseas in Asia or Australia, for instance, salaries, both base and bonus, tend to be the same as in London, but just translated from sterling into euros. So 10 to 15% less, depending on the forex rate at any given point in time. Within locally headquartered firms, compensation can be significantly less. For a managing director at a European headquartered investor, it isn't uncommon to see bonuses n south of a hundred percent, often in the let's say seventy to a hundred percent range. Whereas that would be in London considered at the very low end of the spectrum.

SPEAKER_00 34:20

I'd say less. I'd say maybe it starts at fifty percent up to about eighty. Very rarely would you see a local player on the continent pay close to a hundred percent on the bonus. Um generally speaking, there are exceptions or edge cases, but I'd say more fifty to eighty percent. And if you're at eighty percent, that's a good position to be in.

SPEAKER_01 34:38

Yeah. If you're uh an MD in London at a scaled, you know, let's say 10 billion plus infrastructure investor, you know, uh an established MD and you're taking home less than the equivalent of a million dollars a year, you're paid below market. If you're in Europe and you're taking home half a million euros a year at a European headquartered business, you could easily be on market.

SPEAKER_02 35:05

Okay. Well, look, that is uh an interesting food for thought. Uh thanks for the insight, folks. If anyone wants to find out more, personalize this, find out where should I personally be, where do I sit in you know this whole uh conversation, you can contact these guys and we'll put that we'll put their contact details uh in the feed. Uh thanks for joining us, uh guys. Interesting conversation, and uh see you all soon.

SPEAKER_03 35:33

Thanks, guys.

SPEAKER_02 35:34

Have a lot.

SPEAKER_03 35:35

Bye.