/ 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
/ 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.