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Feb 20 2014 | 11:17am ET
It doesn't take a huge return for the head of a hedge fund's non-investment operations to take home a big check.
A $5 billion hedge fund's operations chief—CEO, chief operating office or president, usually—can earn between $7 million and $10 million if his firm posts returns of 10%, according to executive search firm Boyden. If the hedge fund does even better, the CEO's salary can soar past $15 million.
According to Boyden, hedge fund CEOs or presidents generally earn between $500,000 and $1 million in salary and a fixed management-fee-based bonus of between $1 million and $2 million. And even though he or she has nothing to do with investment decisions, the executive can earn $5 million or more in incentive-based bonuses, depending on how the fund does.
Much of that, however, can be deferred or tied to future performance, a fact that could rile some executives.
"The trend toward performance-based incentive is going to unseat some seemingly comfortable CEOs as the boards of these firms become more progressive and in-tine with the changing incentive trends," Boyden's Kate Quinn told CNBC. "Yesterday's CEOs are not in demand. The market is looking for skin in the game and CEOs with the ability to wear many hats."