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
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...