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Average Portfolio Manager Pay Tops $450K
Article published on Oct 19, 2007
By Kevin Burke
Equity portfolio managers in the U.S. are earning $456,000 a year on average, ranking them No. 1 among all investment professionals, according to research published on Thursday by the CFA Institute.
Fund shops can use the data as a benchmark when negotiating the contracts of their portfolio managers and putting together pay packages for new employees. “You’re always looking for data so that you know what the market is paying, which allows you to be competitive when hiring staff,” says Peggy Eisen, managing director of CFA’s marketing and communications department.
In the U.S., portfolio managers took in median compensation of $456,000. Investment bankers came in second with $275,000, followed by sell-side research analysts, who hauled in $195,000, according to the CFA’s 2007 Member Compensation Survey, which was conducted along with Harris Interactive and AON Corporation.
Portfolio managers with 10 or more years of experience are commanding an average of $499,000, the survey says. Fund skippers with five or more years of experience running money took in $398,000, while those with less than five years on the job made, on average, $205,000.
Bond fund manager pay came in at a median $250,000, the survey says. Managers with more than 10 years' experience took in $350,000, while those with five to 10 years' experience earned $210,000. Bond managers with less than five years on the job made $126,000, according to the report.
The surveyors polled more than 75,000 investment professionals across the globe — including investment bankers, chief investment officers, portfolio managers, research directors and securities analysts — among the 11 countries with the greatest concentration of CFA members. Within that universe, 13,562 participated, representing an 18% response rate.
Because the data included pay trends across the broader investment business, the survey may not provide the full picture of manager pay at top U.S. firms.
Anecdotally, manager pay is trending upward, consultants say, as firms are fiercely competing for talented personnel. “Portfolio manager compensation is pretty aggressive right now,” says Lawrence Lieberman, an executive recruiter at the Orion Group.
“There’s a high level of compensation being paid to good portfolio managers and firms have to keep pace in order to hold on to their strong talent," he says, adding that it continues to rise commensurately with the growth in mutual fund assets, he says. He also says that it is probably $150,000 higher now than it was three years ago.
Lieberman notes that much of the increase is coming from the bonus portion of their compensation. Fund firms aim to keep fixed costs, such as base salaries, down, he says. “When markets turn south you don’t want to be committed to high salaries,” he says.
Pay among investment professionals in general is on the rise. The CFA found that 72% of respondents in the U.S. saw their total compensation rise from 2005 to 2006.
However, stock fund manager pay comes in slightly lower than the $460,000 the CFA Institute reported for the year 2005. However, the CFA has changed its methodology since the last survey, making it difficult to make a historical comparison.
CFA reports that stock portfolio managers have the highest cash bonuses among investment professionals, with a median of $200,000, with investment bankers raking in $185,000 for 2006. The size of a bonus tends to be tied to both tenure and performance.
“The biggest part of portfolio manager compensation tends to be their bonuses,” says David Kathman, an analyst at Morningstar. “A lot of them have a bonus based on the performance of the fund. It’s fairly common.”
Some portfolio manager bonuses are based on performance whereas others are pegged to a percentage of total assets.
Many portfolio managers make considerably more than the median. Janus, for example, is known for having one of the highest-paid portfolio manager teams in the business. Compensation was as much as 10 times the industry average before its restructuring under Gary Black, according to Morningstar analyst Rachel Barnard.
Janus has since taken a more judicious approach to portfolio manager contracts, tying them to long-term performance track records. They’re also encouraged to “eat their own cooking,” with many of the big fund managers investing more than $1 million in the funds they manage, Kathman says.
Christopher Davis, who runs Davis New York Venture and subadvises the Clipper Fund, gets a portion of his compensation in fund shares.
Still, it’s hard to pin down an exact figure to compare fund shops against their peers because fund firms are not required to disclose their compensation in terms of dollar figures. “It’s all over the block,” Lieberman says.
The CFA numbers include both salary and bonuses, with bonuses accounting for 25% of the total compensation package among investment executives. Some 46% said their bonus is primarily tied to their individual performance, while 27% said overall firm performance is most important. Another 22% said bonus is driven by its individual business unit performance.
Ninety percent of U.S. respondents say they were eligible for a cash bonus in 2006. Less than half, however, were offered long-term incentives, the survey shows.
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Monday, October 15, 2007
A New Testimonial Privilege
10-15-07 00:00 Age: 15 hrs
Measure To Shield Reporters' Secret Sources Likely To Pass
Category: Lexis Nexis - AC, PG News & Updates, Acc News & Updates, Main AC RSS Feed, AC - Whats New BY: USA TODAY
WASHINGTON -- A House bill that would help reporters protect confidential sources will pass easily this week, supporters say, despite opposition from the Bush administration.
"I believe we'll have a strong bipartisan vote," said Rep. Mike Pence, R-Ind., the bill's co-author.
The Justice Department sees the proposed reporters' shield law, as it is called, as an obstacle to law enforcement. It could "seriously impede our ability to investigate and prosecute national security matters," spokesman Peter Carr said last week.
Even so, the bill has attracted an unusual right-left coalition.
Liberal Democrats, such as House Speaker Nancy Pelosi, have joined conservative Republicans, such as Pence, to support the bill. Although no floor vote has yet been scheduled in the Senate, the chamber's Judiciary Committee this month approved its version of the shield bill by a 15-2 vote.
News organizations have been pushing for a federal law to protect reporters' sources since the Supreme Court ruled in 1972 that the First Amendment gives journalists no right to refuse to name them. Backers say the House vote represents a major breakthrough. "It's kind of a 'pinch me' moment," Pence said.
It comes the same week that the Senate opens confirmation hearings for President Bush's nominee to be attorney general, Michael Mukasey. The former federal judge worked as a reporter for United Press International while he was in college and later represented The Wall Street Journal and the New York Daily News. On the bench, he ruled against forcing a TV reporter to provide outtakes of an interview to a defendant in a civil lawsuit.
Lucy Dalglish, executive director of the Reporters Committee for Freedom of the Press, is hopeful Mukasey will soften the administration. "I would not expect him to come out and support this, but I would not see him making an effort to destroy it," she said.
The House bill would prohibit courts and federal prosecutors from forcing journalists to reveal sources except in cases where the information is vital to protecting national security or to prosecuting a crime and is not available by any other means. The bill defines journalists as those "regularly involved in newsgathering" and making "substantial income" from it, said Rep. Rick Boucher, D-Va., the bill's other co-author. He said that would cover some, but not all, bloggers.
Thirty-three states and the District of Columbia have enacted similar shield laws. More than 50 news organizations, including Gannett, owner of USA TODAY, support a federal shield law. Sponsors say it will benefit more than the news media.
"The basic reason we're passing this is to protect the public's right to know," Boucher said. He argued that whistle-blowers will be discouraged from talking to reporters if they fear their identities might be disclosed.
Opponents argue that not all leaks involve people risking their jobs to expose wrongdoing. One recent case involved Vice President Cheney's former chief of staff, Lewis "Scooter" Libby, who was accused of leaking the identity of CIA officer Valerie Plame. Libby was convicted of perjury, but Bush commuted his sentence.
"There's got to be accountability so people will think about it before they go out and hurt people," said Brian Sun, a lawyer who represented Wen Ho Lee. Lee, a scientist, won more than $1.6 million in a suit that alleged the government smeared him by leaking information that he was stealing U.S. nuclear secrets for China. The espionage charges against Lee were dropped.
Bush administration officials argue the bill could hurt their fight against terrorism. Lt. Gen. Ronald Burgess, a deputy director of national intelligence, said a shield law "would make it very difficult to enforce criminal laws involving the unauthorized disclosure of classified information."
The Justice Department argues that the news media have plenty of protection. Federal prosecutors subpoena reporters "very rarely," Carr said. He said the department has sought reporters' confidential sources 19 times since 1991.
That figure does not, however, include subpoenas from special prosecutors and attorneys for private clients. By Dalglish's count, at least 40 reporters have been subpoenaed to turn over confidential information in the past three years, and courts tend to rule against the journalists.
Refusal to comply with the court has resulted in long jail sentences for some journalists. Joshua Wolf, a freelance videographer who refused to turn over tape of a protest to federal authorities, served 226 days.
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