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How to Have the Compensation Conversation with Your Corporate Parent

How a CVC Unit Leader has a conversation with a corporate parent on compensation – and why their compensation needs are unique and different from the rest of the parent company – can be tricky. 

If you run a CVC unit, you’ve likely already tried to have this conversation with HR or a corporate exec, or you’re thinking about how to start it. The reality is that your investment team cannot be paid like the rest of the corporate organization if you want to attract and retain the caliber of investor who can compete and syndicate with institutional VC firms. 

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Why CVC Compensation is Structurally Different 

Below are our talking points for a CVC Unit Leader and Team to have with corporate HR and/or Leadership:

#1. Explain that the compensation levers are different.

While public company compensation is relatively straightforward, compensation for an investment firm is more dynamic. helping corporate HR and execs understand how the traditional comp levers (base pay, bonus and public company stock) differ from what motivates a CVC investor is essential. Deal teams care about base pay and bonus, but they also want a meaningful stake in the upside from successful portfolio companies – whether that is carried interest or a shadow/phantom/synthetic incentive. 

#2. Emphasize the unique nature of a CVC and their role in the investment firm ecosystem.

Helping the corporate parent understand that while a CVC draws its investment capital from the parent company, it serves a dual purpose – achieving both strategic and financial returns. The quality of the team is critical. Each CVC needs their own formula to align the unit’s role and mandate with the compensation philosophy and structure – especially in what long term incentive is utilized. CVCs are key players in the market for innovation and the more strategic you are, the more robust the compensation packages need to support that mission and mandate. 

#3. Determine what caliber of talent you are looking to attract and retain.

Share what VC competitors are paying so internal stockholders understand the true market for this talent. The compensation model for a traditional VC firm is structurally different from that of a corporate executive, but if you staff your CVC Unit with investment professionals who come from venture – or who could leave to go to a VC firm – you have to understand how the market pays. If you want seasoned and sophisticated investment professionals – you’re fishing in the same pond as top-quartile VC firms. These individuals not only crave but expect a long-term incentive structure tied to investment outcomes. You don’t necessarily need to offer true carried interest to be competitive but the total rewards package has to be competitive. 

How Thelander Can Help

Having access to real-time compensation data for both CVC Units and traditional investment firms is critical. Thelander is the only firm with two dedicated datasets – 

  • Thelander Investment Firm Compensation Data
  • Thelander CVC Compensation Data 

Whether you’re building the case for your parent company, designing a new comp framework, or assessing how your current compensation compares to market, participating in our no-cost CVC Compensation Survey will give you access to both datasets for 12 months of access for no charge.

Click Here To Participate Today

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