The 2014 Hedge Fund Compensation Report revealed that hedge fund players received increases in both base salary and year-end bonuses.
The average reported cash compensation was up again in 2013 and came in at US$330,000. Base salary played a small role in the increase this year, as bonuses drove the double-digit gains.
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The annual industry report is based on data collected directly from hedge fund managers and employees representing hundreds of firms.
Average cash compensation was up 16% over last year. Base compensation increased only 4%; however, bonuses were 30% higher due to performance-based bonus structures.
David Kochanek, publisher of HedgeFundCompensationReport.com, said: "As we reported last year, fund performance results in significant bonuses, especially for those closely involved in the investment decisions. This wasn’t always the case but in a post-recession market, pay for performance is now the rule."
Two years ago, the Report revealed that hedge fund professionals were worried due to a decrease in fund performance and corresponding bonus payouts. Those surveyed cited market conditions and the pace of redemptions as concerns driving a tough hedge fund job market.
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By GlobalDataThis year, however, those concerns are nowhere to be found. Twenty five percent of firms are looking to hire research analysts and team members in investor relations, legal and back office operations. The number of professionals reporting that their firms are reducing headcount was down across all functions.
An amazing 9 out of 10 respondents reported positive returns for their funds in 2013. Two years ago, only 16% reported double-digit positive returns for their fund, that number is now 54%. Additionally, this year, 18% reported returns of 25% or more with only 3% reporting losses.
Kochanek said: "For those in decision making roles, this level of performance results in tremendous increases in compensation. Thirty-one percent of hedge fund employees expected 15 percent to 100 percent more money while 5 percent expected to see their compensation more than double."
