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Despite the huge earnings of top fund managers often publicized by the media, most hedge fund professionals do not expect seven figure compensation levels. The hedge fund employees surveyed in 2008 expected to earn $291,000 that year, and the actual came in slightly higher at $296,000.
The financial crisis has had less of a negative impact on the salaries of hedge fund employees than in other areas of finance. While many firms around the world are cutting costs and therefore compensation packages, the average expected level of earnings in 2009 for hedge fund employees is up by 14% year-on-year to $336,000 – which is two years in a row of double digit increases.
More than a quarter of respondents expect to see an increase in their total annual salaries over 2009 of 15%, and 9% expect to double their compensation from last year. That said, not all respondents were so optimistic. Nearly 20% of respondents expect to earn less than in 2008.
The result is a polarization of compensation expectation. For example, the amount of employees expecting to be in the top pay bracket of more than $1 million in 2009 has increased considerably. Almost 8% of respondents said they expect to earn more than $1 million in 2009, compared to just 2% in 2008, and 1% in 2007. These optimistic expectations explain the increase in the average expected level of earnings.
There are many differentiating factors which can impact compensation at hedge funds. On a personal level, the role, experience and education of the employee will be a deciding factors. While on a fund level, the performance and size of the fund should determine compensation.
Back to the 2010 Hedge Fund Compensation Report
