MILL VALLEY, Calif. - Most money management companies these days reward employees with short-term bonuses for individual performance.
Almost 93% of money managers provide performance incentives to investment research and trading professionals, and 92% provide them to portfolio managers, according to the latest Competitive Challenges, the annual survey of the money management industry from the Business Strategy Group of Capital Resource Advisors LLC, Mill Valley, Calif. And 85% of money management companies give performance bonuses to their mutual fund shareholder services staff, information services and technology teams and human resources professionals. About 88% of operations and administrative staff also receive an end of year bonus.
As for long-term incentives, CRA's survey of 65 midsize to large money managers found that 58% offered non-qualified stock options, 28% gave restricted stock awards, 26% gave phantom equity awards and incentive stock options, 20% offered a profit-sharing plan and 18% made common stock awards. Fewer than half (39%) of the managers offer employees ownership stakes, with the average employee ownership by company around 18%. CRA found the investment management departments of the companies received the biggest chunk of employee ownership in 2000 (97%), followed by executive management (83%), marketing (73%), client service (63%), information systems and technology (60%), and operations and administration and finance accounting (57% each).
CEO salaries down
Base salaries for chief executive officers, chairmen and presidents are expected to average $559,000 in 2001, down a bit from $563,000 last year, according to CRA data. Last year, the average CEO commission was $371,000, the average bonus was $3.9 million, average total cash compensation was $3.7 million, long-term incentives averaged $2.9 million, equity distribution averaged $606,000 and other categories combined were an average $198,000, for average total compensation of $4.9 million.
Chief operating officers were next best paid among industry professionals, with average total compensation of $2.6 million in 2000, compared with an average of $2.1 million for chief investment officers. Chief technology officers earned an average total compensation of $1.2 million in 2000, while heads of institutional equity investments hauled home compensation packages that averaged $1.7 million.
Total compensation of senior equity portfolio managers averaged $722,000 in 2000, while senior institutional equity portfolio managers averaged $401,000 in their total take-home package. Senior fixed-income portfolio managers averaged $503,000 in total compensation in 2000. Specialist real estate portfolio managers, on the other hand, averaged just $278,000 in total compensation last year, compared with $319,000 for private equity portfolio managers and $208,000 for derivatives portfolio managers.
Money management industry sales executives brought home the bacon quite nicely compared with portfolio managers, with national sales managers averaging $520,000 in 2000 and defined contribution plan sales managers bringing in an average of $559,000 in total compensation. Marketing directors did even better, averaging $805,000 in their total package for 2000. Bigger bucks went to directors of institutional/defined contribution plan marketing, with average compensation last year totaling $1.1 million.
CRA researchers found that money management companies might be spending big bucks developing e-commerce infrastructure, but they aren't shelling out much for e-commerce heads: They averaged $210,000 in total package dollars last year.