"Poor" Hedgies Unhappy With Pay

Date: Monday, October 22, 2007
Author: Hedge Fund Daily

It may come as a shock to the folks in Washington—who want to dig further into the pockets of hedge fund managers with a higher tax—that some of those pockets are not so deep. According to Hedge Fund Search Digest’s compensation survey, the average total compensation for hedge fund managers and executives is just $250,000 and only 3% of those surveyed earn more than $1 million. (To put things in perspective, to make Alpha magazine’s top 25 HF earners list, one needed to get paid $240 million a year.) Broken down by jobs, managers averaged around a thousand bucks per day, per year ($364,566). Analysts meanwhile came in at the low end with $205,381 per year. Given the disparity between the have lots and the have nots, it makes sense, according to the survey, that 76% of those polled are unhappy with their compensation, especially with the constant media exposure the multimillionaire hedgies receive. “Even when you’re getting paid three-quarters of a million or a million a year, there’s still that, ‘What’s possible?,’ Digest President David Kochanek said in  an interview with Dow Jones Newswires. The result is frequent turnover in the industry. In fact, most of the survey participants—who hailed from more than 200 HF firms, including Credit Suisse, Deutsche Bank, BlueBay and Goldman Sachs—were in senior positions, with more than 10 years’ experience, but less than two years in their current jobs. Though the survey found that three-quarters of respondents expect to see raises this year, apparently there won’t be enough. “The dissatisfaction may be a function of expectations and perceived opportunity cost.” The survey also noted:

--Hedge fund analysts on the West Coast earn on average 30% more than their East Cost counterparts.

--Professionals with a master’s degree in business took home about 33% more compensation than those that don’t have one, mainly in the form of a bonus.

--More than half the firms surveyed say they are achieving good to excellent performance, with most using a  multi-manager investment approach.