In a recent interview with The Hedge Fund Law Report, JW Michaels' Managing Partner Jason Wachtel discussed the compensation levels of hedge fund GCs and CCOs. He explained how compensation is usually determined, saying:
"The range in compensation is really determined by a few things: assets under management, performance of the fund and the personnel and the strategy of the fund. If it’s a vanilla long/short equity fund with $1 billion under management, the performance is average, and the general counsel has only been with the fund for about a year, the compensation would be expected to be closer to the lower end of the spectrum. When it comes to compensation, you want to look at when the person joined the firm, how the fund has performed and grown since that time and the person’s role within the firm. The more responsibilities and authority a person has within the firm, the more you can expect to layer on to the compensation."
Wachtel also discussed the compensation structure for "dual-hatted" employees as well as the demand for more junior compliance and legal personnel.
Regarding the relationship between compensation and firm performance, Wachtel explained:
"The bonuses are usually tied to firm performance and individual performance. Mostly, it comes down to whether the person meets or exceeds expectations and the firm has good performance, then the bonus will be higher. If the person simply performs as expected and the fund’s performance is just average, the compensation will be set to a lower percentage."
Wachtel went on to talk about the most common profile for a hedge fund GC: "someone who has at least 10 years’ experience, top academics and top legal training, and is probably the number two person at another shop with an established GC who is not likely to leave in the near future."
Read the full interview at The Hedge Fund Law Report (subscription required).
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