From a Wall Street Journal "dossier" on hedge fund manager Steven Cohen of SAC Capital: "Cohen regularly takes home personal compensation of $1 billion a year, including a roughly $1 billion paycheck for 2010 after 16% gains in his flagship fund, the Journal has reported."
Whatever Mr. Cohen does with his compensation, I doubt that he "takes" it "home" in a single "paycheck" of $1 billion. Far more likely is that he keeps a substantial chunk of it in the fund or funds that he manages; the Journal reports elsewhere today that Mr. Cohen is "the largest investor in his funds." It may be hard for a news reporter, used to taking home a paycheck, to get her mind around the concept, but there's a difference between taking home a paycheck and making investment gains on a fund in which you are the largest investor and partner. The next year, the fund could lose money.
The Journal reports that SAC "manages $12 billion in assets." It doesn't mention what a February 2010 Bloomberg story reported, which is that "SAC, an acronym of its founder's name, now manages $12 billion, down from $16 billion at its mid-2008 peak" and that "The firm's flagship SAC Capital International Ltd. fund suffered a 19 percent loss in 2008." I'm not defending Mr. Cohen's compensation or criticizing it (though I would note that it is earned through agreements with his partners that those partners enter into voluntarily). I'm not suggesting he's hurting for spending money. But these compensation numbers for hedge fund guys, as I understand them, are considerably more complex than "taking home a paycheck."
