Compensation is the topic du jour in the financial sector, what with money-losing firms handing out big bonuses and millions of dollars of government bailout money going into the pockets of executives at insurer American International Group. It’s noteworthy, then, that a majority of investors are not familiar with the compensation formulas that hedge funds use, according to our most recent survey. Still, most investors think hedge fund executives are overpaid.
What type of institution do you represent?
Corporate pension fund 26.4%
Public pension fund 26.4
Taft-Hartley pension fund 1.4
Endowment 43.1
Foundation 2.8
What is the size of your fund?
More than $5 billion 30.0%
$2.5 billion to $5 billion 27.1
$1 billion to $2.49 billion 12.9
$500 million to $999 million 12.9
$100 million to $499 million 11.4
Less than $100 million 5.7
Do you currently invest in hedge funds or funds of hedge funds?
Yes 67.6%
No 32.4
If you answered no, are you considering investing in hedge funds?
Yes 9.1%
No 90.9
If you do invest in hedge funds, how big is your allocation?
More than 50 percent 7.1%
26 to 50 percent 11.9
16 to 25 percent 14.3
11 to 15 percent 11.9
6 to 10 percent 19.0
Less than 6 percent 35.7
Are executives at hedge fund firms paid too much?
Yes 71.4%
No 28.6
Will the pressure to cut back on bonuses for Wall Street employees have an impact on how much hedge fund employees are paid?
Yes, hedge fund bonuses will decrease 71.6%
Yes, hedge fund bonuses will increase 3.0
No, hedge fund bonuses will not be affected 25.4
Should there be a cap on compensation for executives at hedge fund firms running public pension fund money?
Yes 37.7%
No 62.3
Should hedge fund executives be required to invest a portion of their compensation back into their funds?
Yes 57.1%
No 42.9
If you answered yes, how much of their compensation, excluding base salary, should hedge fund executives be required to invest in their funds?
50 to 75 percent 13.9%
25 to 49 percent 25.0
10 to 24 percent 50.0
Less than 10 percent 11.1
Should hedge fund employees be given their entire bonus — excluding payout from the partnership — in cash?
Yes 19.3%
No 80.7
If you invest in hedge funds or funds of hedge funds, are you familiar with the compensation models your managers use?
Yes 42.6%
No 57.4
Should hedge fund managers be required to provide information on their firms’ compensation structure to investors?
Yes 83.3%
No 16.7
Note: Responses may not total 100 percent because of rounding.
