Infovest21's 9th Annual Survey:CEO and CIO top compensation survey for small to medium sized hedge funds

For hedge fund managers with less than $1 billion in assets, the Chief Executive Officer and Chief Investment Officer were the top two paid positions in the $600,000+ range.

Five positions have total compensation between $400,000 and $499,999 – Head Trader, Compliance Director, Senior Analyst, Chief Operating Officer and Director of Sales and Marketing.

Three positions – Portfolio Manager, Chief Financial Officer and Mid-Level Analyst - had total compensation of between $190,000 and $350,000.

Client Services and Operations/Mid-Office had total compensation below $100,000.

Lois Peltz, president of Infovest21 , observed,"In comparing 2010 results with 2009 results, the general trend in 2010 is higher. The Chief Executive Officer, Chief Investment Officer, Portfolio Manager, Senior Analyst and Director of Sales and Marketing are higher while the Chief Financial Officer and the Operations/Mid-Office Trade Support are lower."

Profile of Respondents

The average manager in the survey had $305 million in assets, 14.5 employees and was up 3.5% for the first half of 2010. 96% of the respondents were stand-alone organizations.

Other Highlights

• Asset flow was cited as the number one factor affecting compensation in 2010 compared with performance in 2009.

• Two-thirds of the managers are above their high water mark in 2010 compared with only one-third in 2009.

• In 2010, 96% of the managers were stand-alone organizations compared with 92% in 2009, 100% in 2008 and 79% in 2007.

• Managers are less optimistic about the compensation package. About 25% expect the base salary will increase as a percentage of the total package while 14% expect the equity component will increase as a percentage of the total package. 50% expect no change.

In 2009, 80% of the managers did not expect any relative change to the compensation structure while 40% expected the basic salary to increase in the total package while 32% expected the equity component of the total portfolio to increase.

• As would be expected, the general trend is that the larger the hedge fund, the higher the compensation. Total compensation for the Senior Analyst, however, was the about the same for the $1 billion+ hedge fund managers and those managers below $1 billion.

 
Methodology

Infovest21 conducted its ninth annual compensation survey of hedge funds. The survey was conducted during September, October and November 2010. In-depth interview were conducted by phone. Separate surveys were conducted and results analyzed for those managers with assets over $1 billion and those with assets under $1 billion.

For the small-to-medium-sized manager (under $1 billion), 21 executive and back office positions were included - Chief Executive Officer, Chief Investment Officer, Chief Financial Officer, Chief Operating Officer, Chief Risk Officer, Portfolio Manager, Assistant Portfolio Manager, Senior Analyst, Mid-Level Analyst, Junior Analyst, Director of Research, Director of Sales and Marketing, Director of Investor Relations, Client Services, General Counsel,
Compliance Director/Manager, Controller, Fund Accountant, Director of Operations,
Operations/Mid Office, and Head Trader.

The results are based on data from 30 separate hedge fund management firms, all with assets under $1 billion. In calculating the statistics throughout the survey, we include only those respondents who provided concrete compensation data with dollar figures.

For Chief Risk Officer, Assistant Portfolio Manager, Junior Analyst, Director of Research, Director of Investor Relations, General Counsel, Fund Accountant, Controller, and Director of Operations, not enough data points were provided for 2010 base salary or bonus to allow calculation of 2010 total compensation.

Excerpts from Infovest21's Ninth Annual Compensation of Hedge Fund Managers with Assets Under $1 Billion.

Four related compensation surveys:
Hedge Fund Managers - Assets above $1B
Hedge Fund Managers - Assets below $1B
Funds of Funds- Assets above $1B
Funds of Funds- Assets below $1B