Rethinking carry
For decades, carried interest in private markets has followed a familiar model: a relatively fixed share of profits, concentrated among senior principals and typically paid over long investment horizons.
That model is starting to loosen. 37% of firms already offer broader participation in carry, while 84% of respondents to Ocorian’s survey¹⁶ expect the move towards more flexible, transparent and inclusive arrangements to increase over the next three years.
Tiered carry is one sign of that change. Only 10% currently use structures where the carry rate rises after higher performance thresholds are met, but 90% say they are actively considering them. At the same time, 93% say carried interest or other equity-linked compensation is being shared more widely with non-principal employees than it was three years ago.
Beyond the traditional carry pool
The change goes further than simply giving more employees a slice of the existing pool. 54% already use alternative or phantom equity scheme pools that reward those excluded from traditional schemes, 53% use shorter vesting and retention mechanisms (like clawback for early leavers), and 50% use point systems that involve new employees in legacy deals.
There are signs that more significant change is coming. Earlier-in-fund-life incentives are currently rare, used by just 4%, yet 78% expect their use to increase over the next three years. The same proportion expects broader participation in carry, while 77% foresee greater use of the point systems.
Carry is becoming a more flexible management tool, able to reward people earlier and recognise contributions from a wider group rather than relying on one long-dated incentive concentrated at the top.
What is driving it?
Fund complexity ranks highest as the primary driver of changes to carry allocation, cited first by 37%.
Regulatory and tax changes follow at 33%. Competition for talent is ranked first by 19%, but 58% place it first or second. LP demands for greater alignment and GP continuity also feature, although less prominently.
Longer fund lives and continuation vehicles complicate who participates in each dollar of return. Tax changes affect how rewards are structured, while competition for talent creates pressure for incentives that are more immediate and transparent.
The result is a broader rethink of how people are rewarded, and increasingly are part of how managers attract, retain and reward a much wider group of people, rather than simply an elite group of principals.
¹⁶ Ocorian’s 2026 asset manager survey of 300 senior executives at private equity fund managers
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