Is high hedge fund compensation really that new?
Apr 17th, 2008 | Filed under: Hedge Fund Industry Trends, Media Coverage of Hedge FundsMany countries around the world take a somewhat skeptical view of wealth. While many people in those countries aspire to be wealthy, those who have achieved wealth are usually expected not to flaunt it. As a result, foreigners are often struck by the respect and admiration engendered by wealth in the United States. In the US, wealth isn’t just tolerated, it is celebrated.
But even this staid reverence has its limits. Yesterday’s release of Alpha Magazine’s top-earning hedge fund managers has – at least for this week – reignited the debate over what is fair and equitable in US society. The result has been a sort of mixture of two familiar issues: CEO compensation and the get rich quick phenomenon of the (pre-implosion) tech bubble
John Paulson was #1 on Alpha’s list with 2007 earnings of $3.7 billion. Nine other hedge fund managers made over $500 million. Not surprisingly, the media is now replete with stories about how crumbling home prices and $100 oil helped Wall Street’s Highest Earners pull in $19 billion last year, and there is growing outrage over the quantum of these numbers.
Paulson’s net worth rose by $3.7 billion last year. Yet he wouldn’t have even have made the top 10 on Forbes annual list of the largest year-over-year increases in wealth. According to the most recent Forbes 400 list (October 2007), Bill Gates and Warren Buffet each made $6 billion while Michael Bloomberg made $6.2 billion. Relative no-names like David Koch and Sheldon Adelson made $5 billion and $7.5 billion respectively.
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