Hedge fund paying bonuses for not being a jerk
Back in the good old days, SAC Capital paid its traders large bonuses when they made the firm massive amounts of money. In many cases, that money was earned through less-than-ethical and sometimes illegal means. Eight former SAC Capital employees have been found guilty of insider trading and the firm just paid $1.2 billion in penalties related to its, shall we say, laissez faire attitude toward compliance.
Now, as a transformed family office named Point72 Asset Management, Steven A. Cohen’s hedge fund is attempting to shove the shoe on the other foot. The firm announced to employees this week that they can earn a bonus by being ethical. Seriously.
Some managers and analysts can see as much as a 4% bump in compensation if they follow the firm’s compliance policy and ethical standards, contribute to the community and, of course, put up good numbers, according to Bloomberg.
The program, dubbed “Rewarding What Matters,” will pay out bonuses to employees if they bring concerns to the compliance department or if they suggest certain policy changes, a Point72 Asset Management spokesperson told Bloomberg. Acting like an upstanding member of society outside the office – like serving on a charitable board – can get you paid as well.
The tactic is one of many Cohen and other managers have employed to change the firm’s culture while also bettering the company’s name following years of scandal. They said goodbye to their longtime compliance chief and brought on a software maker to improve internal surveillance, among other moves.
But the bonus program is also likely aimed at limiting employee turnover that has hurt the hedge fund since it stopped trading outside money. Cohen also increased traditional bonuses last year and reportedly asked top portfolio managers to re-up their two-year contracts.
If all you present is your technical knowledge and your work ethic, you will be respected but not necessarily liked. It is important to also present something personal.
Financial organizations are struggling to find good HR people: recruiters, compensation experts and strategists. As such, they are doling out large pay packages to recruit and retain top talent.
For an unknown period of time during the economic collapse, former Federal Reserve Chairman Ben Bernanke was operating under a pseudonym: Edward Quince. Why? We have no idea.
Morgan Stanley investment bankers are on pace to earn the bonus title for 2014. Bond traders at Citi and J.P. Morgan are looking like the biggest losers.
Former Pimco boss Bill Gross has indeed re-launched his newsletter at his new employer, Janus. He talked about Disco dancing and how it compares to the bond market. Fascinating. He also said the economy is going to stink in the near future, so there’s that.
When Goldman Sachs did it, you figured others would follow. UBS is now the third bank to change its conflict of interest policy by preventing certain employees from trading securities in their personal account.
London is starting to make a big comeback when it comes to financial services jobs. Vacancies increased 7% last month and 25% year-over-year. The average salary increase for people taking new banking jobs stood at an impressive 19%.
Buzz Around the Office
Convicted Ponzi schemer Bernie Madoff has offered to write letters on behalf of his five former employees who are scheduled to be sentenced by a federal judge in the coming months. One of them actually took him up on it, which is ludicrous.
Quote of the Day: “I must tell you though that this was no ordinary dance. She – the ex-Disco Queen – and I the young student of Arthur Murray, strutted, boogied, discoed with moves that neither of us thought we could ever do – sober or even mildly inebriated. We dipped, we twirled, I even did a bop or two. Travolta would have been proud. We were ‘Stayin’ Alive!’” – Bill Gross in his first investment letter to clients at Janus Capital