Insight

VARDIS 2022 PE CEO Report

/ OVERVIEW: We are pleased to share with you our third annual PE CEO Report. As in our previous years, we asked about PE CEOs for their perspective on compensation, governance, the relationship with their investors, and the differences in the role under PE ownership. We have also asked our participants to gaze into their crystal balls and provide their outlook on the likelihood and potential impact on their companies of macroeconomic events and trends.

Vardis 2022 PE CEO Survey Report Highlights

/  EXPERIENCED & IN-DEMAND

  • 69% are previous CEOs
  • 57% have worked with PE previously
  •  90% are approached at least 1-2 times per month for new opportunities with 20% at least 3-5 times

/  FOCUSED & ALIGNED

  • 64% expect a liquidity event within 24 months, up from 44% last year
  • 2/3 invested their own capital in the deal with 1/3 investing at least one-year’s salary

/  WELL PAID, COMFORTABLE WITH PAY FOR PERFORMANCE

  • Base salaries are high, averaging approximately
  • Base salaries are largely flat since 2020
  • Target bonus has increased approximately 10% and actual paid bonus has increased by almost 30%

/  PROMISE OF EQUITY PARTICIPATION IS KEY

  • 2/3 have invested their own capital
  • Half are earning the same or less than their previous role and have traded off cash for equity
  • Median "base case" equity payout is approximately $4.5M and has increased 8-10% since our last survey

/  COMPANY PERFORMANCE STRONG - CLOUDS ON THE HORIZON

  • 79% expect improved results over 2021 - 36% "much better" and only 17% expecting a decline
  • Participants site Labor Shortages, Wage Pressure, Turnover and Inflation as highly probable to have a material impact on Company results

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/ METHODOLOGY: 

Between April 14 and May 13, 2022, Vardis contacted the CEOs of more than 1,100 Private Equity Portfolio companies. We asked questions about compensation, board communication, their roles, and their outlook for 2022 and beyond. During this time, Russian forces pressed their attacks on Ukraine, COVID drove a shutdown of Shanghai, the S&P fell by 9.4%, and the US Federal Reserve raised interest rates by 50 basis points in the face of annualized inflation tipping the scales at more than 8%. This is the context in which we asked CEOs their outlook for their own businesses.

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