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Steven Cohen Promises Traders Much Bigger Bonuses - With a Catch
[photo by Insomnike, on Flickr]
Steven A. Cohen is boosting the bonuses he pays to the top traders managing his $11 billion family fortune, but only if they beat the market. The move is in some ways a return to the free-spending ways of Mr. Cohen’s former hedge-fund firm, SAC Capital Advisors, which stopped managing outside investors’ money after the firm pleaded guilty to insider trading 3 years ago.
Yes, isn't it obvious that traders are paid to beat (or at least match) the market? And that bonuses are intended to reward employees for valued-added performance?
Point72 had been paying its stock pickers a fixed 20% bonus on investment returns regardless of how they performed against broader benchmarks. That meant they could be paid handsomely just for matching a rising market.
Under the new bonus system, Point72 will boost those payouts to as much as 25%, but it will only pay the top bonuses on so-called alpha, industry parlance that roughly translates to investment performance above a market benchmark.
