Structuring Hedge Fund Manager Compensation: Tax and Economic Considerations
The Journal of Taxation, Vol. 112, No. 5
The idea that compensation should be tied to a measurable performance standard is not a new one. For hedge fund managers, such an approach often takes the form of exceeding a benchmark, such as an S&P index. Many factors will affect the particular form such a relative incentive compensation package will take, complicated by the partnership provisions of the Code governing distributive shares and guaranteed payments.