Performance-Based Compensation
An incentive-based form of compensation that is reserved for hedge fund managers or elite portfolio managers. The compensation will almost always be based on a percentage of total assets managed, and will be paid out if the portfolio manager delivers returns above a pre-specified level, such as performance in relation to the S&P 500. Investopedia Says:
Many hedge fund managers are paid 20% of client profits if their investment returns are over a predetermined benchmark. Under this form of compensation, talented hedge fund managers that manage large funds can easily earn tens of millions of dollars (if not more). Related Terms:
Carried Interest
Fund Manager
Hedge Fund
Long-Term Incentive Plan - LTIP
Mutual Fund
Portfolio Manager
Standard & Poor's 500 Index - S&P 500
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