General partners may obsess about increased regulation over their pay, but more and more they also need to worry about its impact on compensation structures for portfolio company executives.
For years, compensation models have tied investors' and management's interests, usually by emphasizing capital gains. GPs favor awarding profit interests that provide management with equity-based incentives taxable at capital gains rates. But the growing sophistication of management teams, combined with recent and potential changes in tax laws, has pushed compensation packages to increasingly complex structures.
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