The average hedge fund employee made a lot less money last year than the previous year, and is likely to make even less this year, but the very richest hedge fund managers really raked it in.
The top 25 highest-earning hedge fund managers in the world took home an average of $464 million each last year, almost 600 times as much as the average hedge fund employee, according to Alpha magazine. All told, the lucky 25 made $11.6 billion in 2008, the third-highest amount since Alpha began compiling its list eight years ago.
For the third time in four years, Renaissance Technologies’ James Simons was the highest-paid hedge fund manager in the world. The 70-year-old former math professor made $2.5 billion in 2008, even as his hedge fund suffered $4 billion in redemptions. The previously highest-paid hedgie, John Paulson, whose 2007 compensation of $3.7 billion set a record, had to settle for a mere $2 billion this year.
Centaurus Energy’s John Arnold came in third, his first time among the top five, at $1.5 billion, followed by George Soros at $1.1 billion and Bridgewater Associates’ Ray Dalio at $780 million. Harbinger Capital Partners’ Philip Falcone and Citadel Investment Group’s Kenneth Griffin fell out of the top five.
Further down the list, Kynikos Associates’ James Chanos made his first appearance in 12th place, with $225 million in earnings.
European hedge fund managers enjoyed a record showing in the 2008 list, with nine entrants. Among them are David Harding of Winton Capital Management and Brevan Howard Asset Management’s Alan Howard, who each made $250 million last year.
Their underlings did not fare so well: Average hedge fund pay fell 35% last year, according to Alan Johnson, founder of compensation consulting firm Johnson Associates. Worse still, Johnson predicts that pay will drop another 25% this year, Bloomberg News reports.
Johnson’s figures are, in one sense, at least, much more pessimistic than those offered by Alpha, which says that hedge fund employees made 15% less last year than in 2007. But Johnson called Alpha’s figure of $794,000 for the average compensation package was low, although he didn’t give his own figure.