Hedge Fund Pay Up, Bonuses Down, Reports Say

Nov 11 2009 | 11:28am ET

A pair of new reports on hedge fund compensation offers conflicting stories about how much the average hedgie will get paid this year.

Glocap Search says hedge fund employees will make slightly more this year than last year, and those that work for firms that have done well this year won’t be making too much less than they did in 2007. But compensation consultancy Johnson Associates says bonuses at hedge funds, which often account for much of an employee’s total salary, could be way down this year.

The Glocap survey shows that hedge funds that have done better than average this year will have average total compensation about 2% higher than last year. That may not seem like much, but it means employees at such funds will only be making 5.3% less than they did two years ago, before the credit crisis pushed many hedge funds to the brink, and many others over it.

Employees of average or below average hedge funds will get a bigger pay increase this year, averaging about 7%, but took a bigger cut last year, leaving them 11% below 2007 levels.

While Glocap says total compensation will be up, Johnson says bonuses could drop by as much as one-fifth. While investment bankers may get a year-end check that’s 40% larger than last year’s, Johnson says asset management firm and hedge fund employees will likely see their bonuses cut by 15% to 20%, The Wall Street Journal reports.

Others in the alternative investments world will do even worse. Private equity firm employees will see between 20% and 25% less, while those working for prime brokerages will get between 25% and 30% less.


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