Pay cuts hit hedge fund staff
Staff at hedge funds suffered a 16% cut in their total pay in 2009, including bonuses, as the industry registered its worst year on record and most funds stopped earning the performance fees that had previously fuelled big paydays in the sector.
The average total pay cheque in the industry fell from $940,000 (€692,000) in 2007, to $794,000 last year, according to a survey by trade publication Alpha magazine, which polled more than 800 industry practitioners at about 550 firms.
The dramatic drop in compensation reflected the 19% loss on investments by hedge funds last year, and 21% loss by funds of hedge funds, measured by analysts Hedge Fund Research. Hedge funds have gated in assets, shed staff and cut extraneous expenditure in a bid to trim costs and, in some cases, to stay in business.
One respondent to the survey, said: "The whole economics of firms and so the pay of their managers changed last year and, with a lot of funds not earning much in the way of performance fees, the outlook doesn't look much rosier for them this year."
The survey, whose initial findings were published online today, found the average base salary for chief executives of firms managing hedge funds was about $350,000, with the average cash bonus being $1.27m. When these executives' non-cash bonus was added in, the total compensation package at this type of firm came to almost exactly $2m, about 20% less than in 2007. Managing partners at hedge funds expect to earn $1.3m this year.
Hedge fund chief investment officers earned, on average, $1.4m, while senior portfolio managers earned $1.1m. Senior portfolio managers expect a 45% pay cut this year, to take home total compensation of $604,000.
At hedge fund managers with products across various asset classes, chief executive officers earned on average about $801,000, the survey found.
At funds of funds chief executives earned, on average, $2.9m. The average investment chief at a fund of hedge funds manager pocketed $661,800, including non-cash bonuses, the study found. Senior portfolio managers at the same kind of firm earned about $1.3m in total compensation.
--write to dwalker@efinancialnews.com
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