Survey: Hedge Fund Compensation Rises In 2014

Dec 30 2014 | 12:18pm ET

Evolving Models

In addition to fund performance being the primary determinant of hedge fund compensation, firm compensation models also consider an increasingly broad and complex continuum of qualities, designed to reflect increased teamwork, risk-based capital returns, firm promotion, extending duration of incentives and scrutiny from both regulators and investors of compensation practices.

“Hedge fund compensation structures continued to evolve in 2014 as industry capital reached record levels, balancing competing pressures for talented finance professionals from other industries against increased pressure for lower fees and long-term performance-based compensation packages,” said Kenneth J. Heinz, president of HFR, in a statement.

“The continued emphasis on performance generation, as well as increased emphasis of teamwork, firm profitability and the decreased use of large guaranteed compensation packages, has contributed to a greater alignment of interest which properly incentivizes employees to expand their firms in a responsible manner.”

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