/ OVERVIEW: We are pleased to share with you our third annual PE COO Report. As in previous years, we asked about PE COOs 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
/ LESS COMMON BUT GROWING ADDITION TO PORTCOC-SUITE
Title exists in only a fourth of PE backed companies (per pitchbooK)
Role is US-centric but expanding
Under current ownership average of only 2 years, significantly shorter than CEO or CFOs
/ P & L LEADERS, NOT JUSY MANUFACTURING
Title exists in broad range of industries, including technology, healthcare and financial services
Industries represented shows very little deviation from total PE sample per Pitchbook
Two-thirds have P&L responsibility and P&L backgrounds
Under 25% came up through Finance or Admin
/ CONTINUITY JUST AS IMPORTANT AS SUCCESSION
60% more likely than CEO and 100% more likely than CFO to have been with Company prior to current ownership or to have worked previously with the current investor or Board
About a third each are unlikely and “almost certain” to succeed the current CEO
/ WELL PAID AND IN DEMAND
Less likely than CEOs or CFOs to accept a pay cut
Median cash compensation of $600k plus median equity at liquidity of $5M (based on equity grant of 1-1.5% of shares), outpaced only by CEO
Receives multiple new job approaches each month with 43% reporting at least 3-5 approaches per month
/ CLOUDS ON THE HORIZON
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 COOs of more than 375 Private Equity Portfolio companies. . 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%. We asked questions about compensation, board communication, their roles, and their outlook for 2022 and beyond. The COO title and role are more commonly in use in North America than in other parts of the world. Despite this, the talent market is efficient and global. Where the title exists, the data were consistent.