Pay packages for traditional lending specialists and investment professionals took a hit this past year as real estate investment slowed down across the UK, Bohill Partners’ latest Compensation Review showed.
While volatility in the second half of the year put a strain on some companies, some pan-European asset managers took it as an opportunity to look beyond the UK. Fund managers with European experience and language skills saw their pay rise as a result.
The Bohill study said: “After a general consensus that the market was getting close to its peak this time last year, the twin shocks of Trump and Brexit added an unexpected portion of uncertainty to the mix, generating headaches for some and opportunity for others.”
| Business leadership roles | Base (£000s) | Bonus (%) |
|---|---|---|
| Private equity | 250-500 | 50-150 |
| Fund management | 300-400 | 50-125 |
| Property companies | 400-800 | 75-125 |
Business leadership roles
There is a large disparity in compensation for those running businesses, which, Bohill says, comes from property companies and fund managers having to take on greater responsibility. Pay at property companies is particularly high because of the responsibility required to run a public company.
The study, which included this category for the first time this year, said these numbers stayed “relatively steady” from year to year because a bulk of remuneration came from long-term incentive plans and stock options.
| Private Equity | Base (£’000s) | Bonus (%) | ||
|---|---|---|---|---|
| 2016-17 | 2015-16 | 2016-17 | 2015-16 | |
| Managing director | 170-225 | 190-250 | 100-250 | 150+ |
| Director | 125-180 | 130-200 | 75-200 | 100-200 |
| Vice president | 120-150 | 75-110 | 50-150 | 75-150 |
Investment professionals
With less investment in property in 2016, bonuses became more polarised among private equity players. The upper end saw no change as those funds that stayed active kept bonuses high. The lower end saw falls of at least 25 percentage points in each management level.
| Fund management | Base (£’000s) | Bonus (%) | ||
|---|---|---|---|---|
| 2016-17 | 2015-16 | 2016-17 | 2015-16 | |
| Managing Director | 180-300 | 160-250 | 75-150 | 100-150 |
| Director | 130-170 | 110-180 | 50-100 | 50-125 |
| Vice President | 100-125 | 80-120 | 25-75 | 50-100 |
On the fund management side, Bohill said base salaries rose across the board as their clients pushed for growth despite lower levels of activity. The study also said managers who spoke other European languages and had experience with investment on the continent were likely to be paid better after the EU referendum.
| Private equity | Base (£’000s) | Bonus (%) | ||
|---|---|---|---|---|
| 2016-17 | 2015-16 | 2016-17 | 2015-16 | |
| Managing director | 150-200 | 150-200 | 60-100 | 50-100 |
| Director | 130-150 | 110-200 | 50-100 | 25-100 |
| Vice president | 70-110 | 75-110 | 25-75 | 25-100 |
Asset management
| Fund management | Base (£’000s) | Bonus (%) | ||
|---|---|---|---|---|
| 2016-17 | 2015-16 | 2016-17 | 2015-16 | |
| Managing director | 150-180 | 140-180 | 50-150 | 50-100 |
| Director | 110-130 | 90-120 | 30-75 | 25-60 |
| Vice president | 75-100 | 60-85 | 25-50 | 25-50 |
In this part of the market, compensation has stayed largely flat for managing directors and vice presidents, especially in private equity. The focus for asset managers last year was to hire more at the mid-level and, as with investment professionals, reward those who have pan-European experience. Junior directors’ base salaries have risen by 20 percentage points on the low end of the scale but have fallen by up to 50 percentage points on the upper end.
Lenders
| Traditional Lenders | Base (£’000s) | Bonus (%) | ||
|---|---|---|---|---|
| 2016-17 | 2015-16 | 2016-17 | 2015-16 | |
| Managing director | 170-250 | 160-230 | 50-100 | 75-200 |
| Director | 130-180 | 110-170 | 40-75 | 50-100 |
| Vice president | 70-110 | 75-125 | 30-50 | 50-100 |
| Alternative lenders | Base (£’000s) | Bonus (%) | ||
|---|---|---|---|---|
| 2016-17 | 2015-16 | 2016-17 | 2015-16 | |
| Managing director | 160-200 | 160-200 | 75-125 | 75-150 |
| Director | 120-160 | 110-170 | 50-100 | 75-125 |
| Vice president | 90-130 | 90-130 | 30-75 | 30-100 |
With alternative lenders continue to take a bigger slice of the lending market, they are looking to professionalise and attract more real estate finance talent. As a result, they have seen no falls in base salaries. Meanwhile, managing directors at these platforms saw their maximum bonuses overtake their traditional counterparts’ bonuses this year.
However, traditional banks still pay higher salaries despite managing directors and vice presidents having been paid less this year than in 2015.
Construction and development professionals
| Construction and development professionals | ||
|---|---|---|
| Senior director/MD level | Base (£’000s) | Bonus (%) |
| Construction | 170-220 | 25-50 |
| Development | 180-250 | 50-100 |
There is a divide between construction and development pay, with those working in development more likely to be given a higher base salary and up to 50 percentage points more in bonuses. According to Bohill’s research, with PRS being a relatively young asset class, there is a strong demand for experience in the sector.
Capital raisers
| Base (£’000s) | Bonus (%) | |||
|---|---|---|---|---|
| 2016-17 | 2015-16 | 2016-17 | 2015-16 | |
| Managing director | 180-220 | 140-250 | 75-150 | 75+ |
| Director | 140-180 | 120-170 | 60-100 | 50-125 |
| Vice president | 95-130 | 60-110 | 50-100 | 50-100 |
Bohill says there has been a demand for talent at all levels, although there has not been a big change in compensation. There is still a wide range of pay among managing directors and bonuses have stayed largely the same. However, the bottom end has come up across the board, especially among managing directors where the difference is £40,000.
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