Private equity investors gain from performance-linked pay, Coller report finds
By Arleen Jacobius | December 9, 2012 7:00 pm
Private equity investors who link pay of their own executives to performance have better performance than their peers, according to private equity manager Coller Capital's latest Global Private Equity Barometer.
More than 55% of limited partners with performance-related pay had portfolios that earned an 11% internal rate of return or more. By comparison, only 19% of the private equity portfolios of investors that do not consider performance in their own executives' pay earned a return of 11% or more, the survey indicated.
“There's a disparity between investors that offer executives performance-related pay and those that don't,” said Michael B. Alfano, principal in Coller's New York office
The report, done semiannually, also found investors have the same return expectations they had at this time last year.
“Limited partners remain optimistic about private equity performance, with 80% of LPs forecasting net annual returns of more than 11% from private equity over the next three to five years,” Mr. Alfano said.
The survey was conducted by Arbor Square Associates for Coller Capital in September and October; 131 private equity investors responded to the survey.