Compensation and bonus percentages for hedge fund professionals vary greatly depending on job title, responsibilities and experience, according to the just-published 2008 JobSearchDigest Hedge Fund Compensation Report.
The highest earnings by title included Partner or Principal, Director, Portfolio Manager and CFO. We also heard from many respondents that their compensation is disconnected from their individual performance, and relies much more on fund or overall firm performance.
In fact, this year’s results showed that the more you make, the more you rely on the performance bonus or “carry”. We define carry as the percentage of the fund profits that is awarded to the fund management team. This total number is typically 20% and that percentage is then divided among the management team. The average performance bonus represents 49% of one’s total compensation. We see a tipping point for the importance of carry for those earning over $300,000 per year – meaning at that point, they start earning more from their bonus than from regular compensation.
The average total cash compensation grew by 4% last year to $260,000 USD. Although primarily a North American based report, over 10% of respondents were in the UK. We found the UK is feeling impact of the market shift earlier this year, as the average compensation for hedge fund jobs in London has actually decreased over last year.
You can read the executive summary of the Compensation Survey at JobSearchDigest.com