Seventh annual report shows big hedge fund bonuses tied to strong fund performance.
The 2014 Hedge Fund Compensation Report revealed that hedge fund players received increases in both base salary and year-end bonuses. The average reported cash compensation was up again in 2013 and came in at $330,000. Base salary played a small role in the increase this year, as bonuses drove the double digit gains. The annual industry report is based on data collected directly from hedge fund managers and employees representing hundreds of firms.
“As we reported last year, fund performance results in significant bonuses, especially for those closely involved in the investment decisions,” said David Kochanek, Publisher of HedgeFundCompensationReport.com. “This wasn’t always the case but in a post-recession market, pay for performance is now the rule.”
Two years ago, the Report revealed that hedge fund professionals were worried due to a decrease in fund performance and corresponding bonus payouts. Those surveyed cited market conditions and the pace of redemptions as concerns driving a tough hedge fund job market.
This year, however, those concerns are nowhere to be found. Twenty five percent of firms are looking to hire research analysts and team members in investor relations, legal and back office operations. The number of professionals reporting that their firms are reducing headcount was down across all functions.
An amazing 9 out of 10 respondents reported positive returns for their funds in 2013. Two years ago, only 16 percent reported double-digit positive returns for their fund, that number is now 54 percent. Additionally, this year, 18 percent reported returns of 25 percent or more with only 3 percent reporting losses.
“For those in decision making roles, this level of performance results in tremendous increases in compensation,” says Kochanek. “Thirty-one percent of hedge fund employees expected 15 percent to 100 percent more money while 5 percent expected to see their compensation more than double.”
About The Report
The 2014 Hedge Fund Compensation Report is based on compensation data collected directly from hundreds of portfolio managers and employees during October and November 2013. The full report can be downloaded instantly at HedgeFundCompensationReport.com
The Report has grown to become the most comprehensive benchmark for hedge fund compensation practices in the industry. Respondents participating over the years represent a good cross-section of the industry including small firms as well as some of the most recognized hedge fund firms, including: Apollo Global Management, Bank of America Merrill Lynch, Barclays, Blackwater Capital, Citi, Credit Suisse, Deutsche Bank, Gottex Fund Management, HSBC, JP Morgan Chase & Co., LCF Rothschild, Man Investments, RBC, Silver Point Capital, UBP Asset Management, UBS and Wells Fargo Alternative Strategies.
About Benchmark Compensation
HedgeFundCompensationReport.com is published by Benchmark Compensation. Annually, the firm collects compensation data directly from hundreds of hedge fund managers, principals and employees from firms both large and small. The firm also provides compensation consulting services for firms looking for customized benchmark data analysis.