Hiking up Uncle Sam's cut

Wed Jun 1, 2005

There is no more important topic in the hedge fund industry than compensation. And now that Washington has attacked fat cat pay, fat cat hedge fund managers are affected as well. With the passage of a new law in October 2004, employees at U.S. companies lost their lucrative ability to accumulate compensation tax deferred. Now the hedge fund industry is holding its breath to see exactly how bad the damage is.

Advice to industry: keep a low profile on this issue at this delicate moment and don't get greedy. If the general public starts focusing on how much hedge fund managers are making, it will only get worse.

Think about it. A medium-sized, $2 billion hedge fund, assuming a 15% net return with a 20% carry, will make the senior partner a cool $25 million a year and eight other partners $3 million to $5 million each, estimates Alan...

ISSN: 2151-1845 / CDC10004H

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