Infovest21's Annual Hedge Fund Manager Compensation Survey

CEO and COO top compensation survey;Results mixed compared with last year

Infovest21 conducted its eighth annual executive compensation survey of hedge funds during September, October and November 2009. Separate surveys were conducted and results analyzed for those managers with assets over $1 billion and those with assets under $1 billion.

For the large (over $1 billion) managers, 21 executive and back office positions were included - Chief Executive Officer, Chief Investment Officer, Chief Operating Officer, Chief Financial Officer, Chief Risk Officer, Director of Research, Portfolio Manager, Assistant Portfolio Manager, Senior Analyst, Mid-Level Analyst, Junior Analyst, General Counsel, Compliance Director, Director of Sales and Marketing, Director of Investor Relations, Client Services, Fund Accountant, Controller, Assistant Controller, Director of Operations and Operations/mid-office.

The results included data from 21 separate hedge fund management firms. In calculating the statistics throughout the survey, only those respondents who provided concrete compensation data with a dollar figure were included.

Total Compensation Due to the financial crisis and uncertainty at some firms, 2009 bonuses were not provided for a few of the positions examined. In those instances – Chief Investment Officer, Chief Risk Officer and Controller - where the sample size was too small, we could not calculate total compensation for 2009.

With that caveat, the top paid positions in 2009, based on the information provided, were Chief Executive Officer and Chief Operating Officer. Both positions had total compensation over $1 million.

Three positions have total compensation between $600,000 and $999,999. They were: Director of Sales and Marketing, General Counsel and Chief Financial Officer.

Twelve positions – Director of Research, Portfolio Manager, Compliance Director, Director of Operations, Senior Analyst, Assistant Portfolio Manager, Mid-Level Analyst, Junior Analyst, Director of Investor Relations, Client Services, Assistant Controller and Operations/Mid-Office – had total compensation of between $100,000 and $399,999.

Fund Accountant had a total compensation below $100,000.

Impacted by the financial crisis, the trend for compensation in 2009 was mixed compared with last year.

Generally, management positions were higher (e.g. Chief Executive Officer, Chief Financial Officer and Chief Operating Officer) but lower for most investment positions (e.g. Portfolio Manager, Assistant Portfolio Manager, Senior Analyst, Mid-Level Analyst, Junior Analyst, Director of Research.) Compensation was also lower for financial positions (e.g. Fund Accountant, Assistant Controller).

Sales and marketing positions were mixed – higher for Director of Sales and Marketing but lower for Client Services. Legal/compliance compensation positions were also mixed – higher for General Counsel but lower for Compliance Director.

Other highlights
In nine positions, the average bonus outweighs the average base salary. In rank order, these are: Chief Operating Office, Director of Sales and Marketing, General Counsel, Chief Financial Officer, Chief Executive Officer, Junior Analyst, Portfolio Manager, Chief Risk Officer and Director of Research.

35% of the managers surveyed said they did not change head count. While 35% increased head count another 30% lowered head count.

In 2009, asset flow and fund performance were cited by 47% and 44% respectively as the factors most affecting compensation.

Many variations on the bonus structure are cited. For those positions where the bonus was based on performance, some patterns were noticeable. For example, firm performance was the predominant factor for the majority of positions including: Chief Executive Officer, Chief Operating Officer, Senior Analyst, Mid Level Analyst, Director of Research, General Counsel, Compliance Director, Assistant Comptroller and Director of Operations.

A full copy of Infovest21\'s $1 billion+ hedge fund manager compensation report is available by calling Infovest21\ at (212) 686-6440 or emailing general@infovest21.com.

The full report details base salary, bonus and total compensation for 21 executive and back office positions. High, low, average and median are provided for each position. Manager profile and factors affecting hiring/compensation are also included. Report also assesses the impact of asset size on compensation results and compares 2009 results to those of 2008 as well as impact of high water mark on compensation results.

Separate compensation surveys are available for:
Hedge funds with assets above $1 billion
Hedge funds with assets below $1 billion
Funds of funds with assets above $1 billion
Funds of funds with assets below $1 billion
UK managers

Each report is $700. Volume discounts available for multiple purchases.