Hedge fund compensation up 50 percent in 2007

Date: Tuesday, April 15, 2008
Author: Reuters.com

NEW YORK, April 14 (Reuters) - Hedge fund professionals saw their pay climb 50 percent in 2007 despite the pain from the credit crunch and the increase in market volatility, a report from Alpha Magazine showed on Monday.

The survey of more than 800 people at nearly 600 firms found the chief executives of single-manager fund firms took home average compensation of $3.8 million last year.

"Some managers have profited enormously from the collapse of the U.S. subprime mortgage market," the magazine said in a report published on its Web site. "However, making money has gotten more difficult as banks that were caught holding troubled subprime paper have reduced lending to hedge funds."

Despite the market turmoil, hedge fund employee compensation was strong in 2007 compared with previous years, Alpha said.

Chief executives at fund of fund firms took home an average $1.8 million, including bonuses, while the total compensation of CEOs at multi-strategy funds was more than $5.3 million, the study showed.

Average take-home pay for junior traders at multi-strategy and single-manager firms topped $200,000 in 2007. Meanwhile, pay for senior traders was an average $819,000 at multi-strategy firms, and topped $1.6 million at single-manager hedge funds.

"Even in the hard times that began last summer, many hedge fund managers did reasonably well, though the subsequent spike in volatility and market extremes have fueled extremes in compensation as well," Alpha said in a statement. (Reporting by Emily Chasan, Editing by Jacqueline Wong)