GREED

Hedge-fund mangers do VERY well and recently their compensation has reached into the stratosphere:

Top hedge fund manager had take-home pay of $1.5 billion in 2005
on 5% fee and 44% of gains
By Finfacts Team
May 26, 2006, 08:26

Last year, managers had to take home $130 million to make it into the ranks of the top 25. And there was a tie for 25th place, so there were actually 26 hedge fund managers who made $130 million or more.

Alpha says that one year ago Edward Lampert of ESL Investments made headlines when he became the first manager in the survey to earn $1 billion in a year. This time there are two who break the billion-dollar barrier: James Simons of Renaissance Technologies Corp. and BP Capital Management’s T. Boone Pickens. In 2005 maths whiz Simons, earned a staggering $1.5 billion, edging out oil tycoon Pickens, who took home an equally astounding $1.4 billion from two hedge funds he quietly launched ten years ago. Although Lampert saw his earnings cut by more than half in 2005, he still made a cool $425 million, good enough for sixth place on the list. Rounding out the top five are three longtime managers: Soros Fund Management’s George Soros, $840 million; SAC Capital Advisors’ Steven Cohen, $550 million; and Tudor Investment Corp.’s Paul Tudor Jones II, $500 million.

What's interesting from a moral point of view is how these gigantic incomes, called "carried interest," are treated by the IRS:

Semantics Aside, Carried Interest Is Salary
October 18, 2007
By Jonathan Shazar, Senior Reporter

The growing debate about “carried interest”—the profit share of hedge, private equity and venture capital fund managers, i.e., their performance or incentive fees—both in the United States and in Europe, has predictably degenerated into something closely resembling class warfare.

Alas, in this case, the huddled masses have a point. “Carried interest”—which currently is taxed at the 15% capital gains rate, rather than the higher earned income rate—is not “sweat equity.” It is unambiguously salary: money paid to a fund manager for doing his or her job, that is, taking an investor’s money and making it grow as much and as fast as he can. To argue otherwise is merely a battle over semantics.


There have been some proposals to treat hedge-fund manager income as regular income but they don't like that at all and apparently neither do some of our so-called Democratic representatives:

Both Mr. Kerry and Mr. Emanuel have been cool to another tax proposal -- one that would raise taxes on "carried interest" paid by managers of private-equity and venture-capital funds, as well as some real-estate deals.