Comp for Experienced Hedgies Top $1.5M

Date: Thursday, October 26, 2006
Author: Dailyii.com

For the first time, the average compensation for hedge fund managers with more than a decade of experience has topped $1.5 million a year, according to the just-released 2007 Hedge Fund Compensation Report, which is published by Glocap, Institutional Investor News and Lipper HedgeWorld. The new figure represents an estimated 10-15% increase over the past year, and doesn?t take into account the millions of dollars managers can make from equity interests in their businesses. Average take-home pay for less-experienced managers at top hedge funds is around $580,000, while chief operating officers at the biggest firms are raking in more than $800,000 annually in salary and bonuses. The biggest salary growth areas, however, are found in non-HF manager positions, such as compliance officers, risk managers and marketing pros. They have seen their compensation climb about 20% over last year. The main activity in hiring in the hedge fund business has been on the infrastructure side in recent years, Glocap managing partner Adam Zoia said in an interview with MarketWatch. That's an indication of the maturation of the industry and the result of big funds getting into increasingly complex strategies. One finding of particular note: compensation keeps going up, even as returns remain flat. In other words, it's costing hedge funds more money to hold on to their best managers even as the cash to pay them isn't coming from returns. That money comes from the owners pockets, Zoia said, adding that fund owners themselves are taking home less. Infrastructure costs are higher now and there's still a war for talent.