Hedge-fund employees fortunate enough to survive last year's industry carnage are expected see their pay rebound this year, according to a new survey from executive-search firm Glocap Search LLC and industry publication HedgeWorld. While total compensation at some of the top-performing firms is back to 2007 levels, on average total pay is still forecast to be down by 10% to 15% from that peak year.
"Firms are having a really good year. Their confidence is back," said Adam Zoia, chief executive officer of Glocap. Many hedge funds have pruned staff, hit their high-water mark for the year and are now hiring again.
Glocap is expecting strong hiring in the first quarter of 2010 as firms scoop up talent looking to move after bonus season.
"There's a lot pent-up demand," said Zoia. "Beyond that, we don't have much visibility."
Pay is bouncing back after double-digit decreases in 2008 at most firms, ranging from 20% to 40%, according to Zoia. That drop would have been sharper had many firm owners not "subsidized" pay in 2008, ignoring their own pay-for-performance policies, he said.
Rewarding the SurvivorsDespite the upbeat forecast, overall employment in the industry is still down 20% to 25% from 2007, Zoia estimated. People who lost jobs in the hedge-fund industry in the past year aren't likely to find work there again, he said. But many should be well-positioned to find jobs on the sell side, in investment banking, elsewhere in asset management, or in consulting.
"B-players have been flushed out," he said. "People are being more picky."
Whether the hiring remains strong after the first quarter will likely depend on the growth of assets under management, Zoia said. "I think [overall hedge-fund employment] will climb back up over time, tracking assets under management in the space," he said.
Pockets of DemandHiring demand has been greatest for fundraisers such as marketing and investor-relations professionals. While these professionals didn't see much of a bump up in pay in 2009, they didn't take the hit that some of their colleagues in other departments took in 2008, Zoia said.
Total average annual compensation for midlevel investor-relations professionals with four to five years' experience is about $250,000 to $300,000. Junior investor-relations pros earn about $150,000 a year.
Chief marketing officers are earning annual base salaries of about $250,000 and up this year, and bonuses vary based on the firm size, assets gathered and the formula used to calculate them. Glocap has placed several CMOs this year who will earn bonuses of seven figures or more, depending on how much money they bring in, Zoia said.
Other pockets of hedge-fund hiring demand have been for distressed and credit investment professionals, equity professionals, back-office operations, accounting and compliance.
Survey Highlights: Base Flat, Bonuses UpBase salaries for investment professionals and traders were essentially flat on average, regardless of fund size or performance. Increases were in the low single-digits over 2008. At the same time, expected 2009 cash bonuses for investment professionals are projected to rise about 15% on average from 2008. The biggest increases will be at funds that had the highest pay cuts last year but most will be lower than those in 2007.
Survey Highlights: Top Funds, Top DollarTotal average compensation at funds that outperformed their peers is projected to be about 2% higher than in 2008. That amounts to about 5% less than in 2007. Total average pay at funds performing at or below average is expected to be about 7% more than in 2008. But that's more than 11% less than in 2007.
Related: Buy-Side Bonuses to Fall, Sell-Side to Rebound
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