Earlier this week, I asked, “What’s Wrong With Billionaire Fund Managers?”
We noted the very top % of this profession carried enormous compensation for those Alpha creators who earned tremendous returns for their partners. Most of the top earners are also have very significant holdings in their own funds. They not only get paid for taking risks with OPM, but with their own money at risk as well.
At the same time, if you really want to be upset at enormous paydays, the collection of thieving former CEOs who helped destroy shareholder value then parachuted out with 100s of millions of dollars were better targets for your ire.
Their approach was from a different angle, based on both earnings size and source
1. Appreciation vs. Compensation
2. Paper vs. Cash
3. Income vs. Options
4. “Creating” vs. “Speculating”
Here is the quadrant they put together:
In today’s NYT, Harvard prof Greg Mankiw also looks at wealth disparities, using Lloyd C. Blankfein, chief executive of Goldman Sachs and Bill & Hillary Clinton as examples (The Wealth Trajectory: Rewards for the Few).
Note to Professor Mankiw: From a statistical perspective, perhaps another example from a pool of candidates greater than three (living former US Presidents) or one (the most recently retired President) might be more suitable, informative and tad a less political. That choice tainted an otherwise fine article…
Courtesy of NYT
What’s Wrong With Billionaire Fund Managers? http://bigpicture.typepad.com/comments/2008/04/whats-wrong-wit.html
Is high hedge fund compensation really that new?
All About Alpha, 17 April 2008
The Wealth Trajectory: Rewards for the Few
N. GREGORY MANKIW
NYT, April 20, 2008