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Here's a summary of what Wikipedia says about hedge funds. There's a lot more on their page (linked to the left). A hedge fund generally refers to a relatively unregulated investment fund, often a partnership rather than a corporation in form, and characterized by unconventional strategies (i.e., strategies other than investing long only in bonds, equities or money markets). While most of today's hedge funds still trade stocks both long and short, many do not trade stocks at all. For U.S.-based managers and investors, hedge funds are simply structured as limited partnerships or limited liability companies. The hedge fund manager is the general partner or manager and the investors are the limited partners or members. The funds are pooled together in the partnership or company and the general partner or manager makes all the investment decisions based on the strategy it outlined in the offering documents. In return for managing these funds, the hedge fund manager will receive a management fee and an incentive fee, with the management fee being a fee computed as a percentage of assets under management and the incentive fee computed as a percentage of profits of a "high water mark". The fee structures of hedge funds vary but typically the management fee ranges from 1-2% of the assets under management and an incentive fee that is usually 20% of the profits of the fund and can include "hurdles" or other items. Certain highly regarded managers demand higher fees. For example, Steven Cohen's SAC Capital Management charges a 50% incentive fee (but no management fee) and Jim Simon's Renaissance Technologies Corp. charges a 5% management fee and a 44% incentive fee. Offshore hedge funds are usually domiciled in a tax haven and are designed for U.S.-based hedge fund managers to manage the assets of foreign investors and tax exempt U.S. investors. In this structure, the manager will receive a management and incentive fee and will also be invested in the fund as an investment manager. The typical hedge fund asset management firm includes both the domestic U.S. hedge fund and the offshore hedge fund. This allows hedge fund managers to attract capital from all over the world. Both funds will trade 'Pari passu' based on the strategy outlined in the offering documents.

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2008-12-27 14:45:37
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Q: Does a Hedge Fund Manager's incentive compensation get paid only if the profits are realized and not just increases in appraised values that are not yet realized?
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Should managers and non managers be appraised from multiple prespectives?

Yes, managers and non-managers should be appraised from the top and the bottom. This will help executive managers get a better idea of how they are performing.

How much do Bank Branch managers make?

Bank Managers in New York will typically make base salaries of 70K-100K. Most banks offer incentive compensation which can range from 10k-65k per year.

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1. Shareholders determine the membership of the board of directors by voting. 2. Contracts with management and arrangements for compensation can be made so that management has an incentive to pursue shareholders' goals. 3. Fear of a takeover gives managers an incentive to take actions that will maximize stock prices 4. Competition in the managerial labour market may force managers to perform in the best interest of shareholders. Firm willing to pay the most will lure good managers.

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Utilize Incentive Compensation and Watch Productivity Soar?

A favorite tool used by managers who oversee a sales team, incentive compensation can be used in many other work situations where employees can increase their earnings based on productivity. By rewarding employees for results rather than effort, managers often notice that their staff finds creative and successful ways to get their job done. Whether a substitute for a regular salary, or an added bonus on top of a worker’s regular pay, incentive compensation usually results in higher output. In the case of sales, incentive compensation is usually set up as a bonus structure. Based on the number of deals a sales person closes, or the amount of money they bill for their employer, they are rewarded with bonus pay. Alternatives to monetary incentives can include paid vacation days, flex time, gift certificates, and any other creative rewards that managers can dream up. Not all positions define productivity as clearly as those in sales, however, incentive compensation can still be implemented. For example, customer service employees can be rewarded based on the number of clients they assist each day. In cases where quality of service is more important than quantity, incentives can be based on the customer feedback. All employers hope that they hire individuals who have an excellent work ethic and will excel at their job regardless of enticing incentives. However, it has been proven that employees who see their efforts directly rewarded do produce more. In addition, the competitive atmosphere that incentive compensation creates also drives worker output. While some companies keep employee’s productivity confidential, others pit employees against each other making it clear that those who do not perform up to par with their counterparts will not be rewarded and may be cut. The success of incentive compensation does in part depend on the nature of the business and the personality of the employees. While some people are totally turned off by a competition-driven company, others are energized by this approach to management. Regardless, a well researched and well executed incentive compensation plan will usually result in a motivated staff and a profitable business.

What are some of the pitfalls of a company basing a managers or CEOs compensation on the companys earnings?

The biggest pitfall is the temptation to fraudulently inflate earnings in order to 'earn' more compensation. Another is that it encourages managers to focus on short-term profits rather than long-term growth

Why is it important to include operating employees non-managers in the development and use of an incentive program?

It is important to include operating employees (non-managers) in the development and use of incentive programs in order to disseminate the desired business goals. This is especially true for manufacturing companies where the operating employees play a major role in the organization reaching preset goals. Operating employees (non-managers) are able to contribute information or suggestions as to how to reach the desired results. They represent the pulse of the organization. Operating employees are aware of all situations that may prevent the organization from reaching that target goal. Extending the development and use of the incentive programs to encompass the non-managers will aid in making them think more like owners (Ivancevich, 2010). The goal of a joint committee of upper-level and lower-level employees is to insure that the operating employees (lower level) will "buy in" on the incentive programs (Ivancevich, 2010). Just rolling out an incentive program without the input of the operating managers does not make them feel as if they are an intricate part of the team.

How can managers be encouraged to act in shareholders best interest?

Managers can be encouraged to act in their shareholders best interest by linking their pay to the stock price. When they are motivated by compensation then they will do things to make the share price increase.

How much does a ups ft manager make?

The salary of a UPS manager consists of 3 elements: base salary, holiday bonus and manager's incentive. A newly promoted UPS manager will earn approximately $6500 to $7000 a month. The holiday bonus is a 1/2 month (between $3250 and $3500) But the real pay escalator is the manager's incentive. Each year, the company takes 15% of pre-tax profit and divides it among all the "partners" in the business. Last year, the incentive for managers was 4.8 times the monthly salary, so that worked out to be a $31,200 bonus! This is an example using a newly promoted manager. Typical UPS managers have been managers for many years, with annual pay increases in the 3-5% range. Do the math...but on the low end, a UPS manager is knocking down close to $115,000.

What is meant by a sales incentive plan?

A sales incentive plan is a business tool used by sales managers to boost the working force to increase sales in the retail store establishment. Incentives can be cash rewards, higher commissions, upgrade in the company or a worthwhile raise.

How should managers monitor the progress of decision implementation?

Managers should monitor the progress of decision implementation by watching productivity. If productivity increases, then they have likely made the right decisions.

How do differing perspectives affect your views of compensation?

1. Compensation is viewed by society as a measure of justice as well as a cause of increased taxes and price increases.2. Stockholders are concerned with executive pay relative ti company performance.3. Managers view compensation as a major expense and a means to influence employee behaviour.4. Employees view compensation as return in an exchange with their employer an entitlement or a reward in other countries Ex ( china,Japan)5. In other countries compensation is related to being taken care of.( some places in china they still give rice allowances or transportation allowances)6. So looking at all these perspectives of compensation you now need to look at the pros and cons of compensation with your own perspective.

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