The Upshot: Hedge fund managers rake it in
Top-performing hedge fund managers saw their pay soar by 45% to an average of 194m ($363m) last year. Read that line again.
The figures come from Institutional Investor's Alpha magazine list of the top 25 highest paid fund managers, and included for the first time fund managers whose earnings broke the $1bn barrier. James Simons of Renaissance Technologies with $1.5bn and T. Boone Pickens Jr of BP Capital Management with $1.4bn topped the Top 25.
By contrast, the highest-ranking UK managers in a list dominated by US firms were GLG co-founders Noam Gottesman and Pierre LaGrange, who took home $150m each.
Gottesman and LaGrange may need the extra dosh to make a dent in the 1bn tax bill Her Majesty's Customs and Excise is seeking to slap on UK hedge fund managers, according to Financial News. With the industry booming as it is, however, funds should be able to come up with the goods in no time.
Stock on the block
The past few weeks may have been painful for senior employees at Goldman Sachs, Lehman Brothers and Merrill Lynch. They've seen the value of stock they hold in their employers fall more than 10%.
Lehman bankers have been the biggest losers. Since late April, the company's stock has dropped some 18%. For chairman and CEO Richard Fuld, who received restricted stock worth $14.9m on his last pay day, 18% amounts to $2.7m disappearing, notionally at least.
Goldman stock has fallen around 12% since early May, and Merrill Lynch stock has fallen by a similar amount since late April. The good news, however, is that options issued to US bankers around bonus time in December are not currently underwater - broker shares have fallen in the last month, but they are still generally higher than late 2005.
Brad Hintz, a banking analyst with Sanford C. Bernstein & Co in the US, says bankers are likely to be sanguine about recent reductions anyway: "Brokerage stocks are highly volatile and with vesting periods as long as five years there is plenty of time for them to come back up again."
Goldman CV-worthy
A survey by Universum, a Swedish graduate research company, has put Goldman Sachs ahead of other investment banks as the favourite employer among business students at UK universities.
Accountancy firm PricewaterhouseCoopers ranked as business students' overall preferred destination. HSBC ranked second. However, Heledd Clarke, UK country manager for Universum, says HSBC's success was probably more attributable to its strong retail bank than its desirability as an investment banking employer.
Goldman ranked sixth overall. JPMorgan, which regularly topped the banking ranking a few years' ago, came in 11th this year. Morgan Stanley came 12th, followed by Deutsche Bank, Citigroup, Merrill Lynch, UBS, Credit Suisse, Lehman Brothers and Bank of America, which scraped in at 47th.
Clarke says Goldman's appeal is all down to prestige: "Goldman Sachs has a strong reputation on campus and is seen as somewhere that students would like to have on their CVs."
M&A boutiques à la mode
It's been an interesting week for corporate financiers with an impulse to leave large investment banks and head for smaller boutiques.
Keefe Bruyette & Woods, the specialist financial services investment bank, followed in the footsteps of Evercore Partners, the US mergers and acquisitions boutique, and launched an initial public offering that could raise around $100m.
Financial News wrote that Gerardo Braggiotti, the former star dealmaker at Lazard's Italian business, is preparing to open offices for his boutique, Gruppo Banca Leonardo, in Paris, Spain, Belgium and the Netherlands later this year. And star Wall Street dealmaker, Joseph Perella, received permission from the Securities and Exchange Commission to launch his boutique before the end of this month.
One seasoned headhunter told eFinancialCareers.com the boutique sector is increasingly appealing to senior M&A bankers: "A lot of people don't want to work in corporate finance for a second-tier bank, and neither do they want to work for a bulge bracket bank where they're obliged to sell a whole range of other products. Boutiques suit those who want to be trusted advisor types."
He says the ability of some boutiques to offer equity is compounding their attraction. However, Bridgewell, a UK corporate finance boutique with plans to float later this year, showed the dangers of getting equity awards wrong. Financial News reported that 10% of the firm's 85 front office staff have left this year, partly due to peevishness about their allocations.
