31-year-old hedge fund star earns $119 million
Does he deserve that phenomenal paycheck? One of his trades in 2012 resulted in a whopping $2 billion in gains.
James Levin first got to know billionaire hedge fund manager Daniel Och when he taught Och’s son to water ski at camp a number of years ago.
At 31, Levin these days is a prized employee at Och’s Och-Ziff Capital Management (OZM) hedge fund firm and last year Levin was paid phenomenally well even by the standards of the rich hedge fund industry.
According to a recent Securities & Exchange Commission filing, Och-Ziff Capital Management paid Levin $119 million in 2013. Nearly all of Levin’s compensation last year consists of stock awards and the value relates to the grant-date fair value of unvested Och-Ziff Group A units. A spokesman for Och-Ziff Capital Management declined to comment.
Levin was promoted at the age of 30 in 2013, becoming an executive officer at Och-Ziff Capital Management, where Levin is head of global credit investing. Levin made a hugely successful trade involving more than $7.5 billion on structured credit debt investments in 2012 that resulted in gains of some $2 billion, according to a 2013 report in TheWall Street Journal. It was described as one of the best bets on Wall Street in 2012.
The hedge fund and alternative investments industry pays its stars very well, with the top hedge fund managers earning more than $1 billion in good years.
But the top-earning hedge fund managers are generally billionaire founders of successful hedge fund firms like David Tepper, Ken Griffin or Och himself, who have spent years compounding their own hedge fund derived fortunes and own big stakes in hedge fund firms that charge investors rich fees.
Still, the battle for talent these days in the hedge fund world means hedge fund firms need to pay top dollar in the form of compensation alone to retain and attract their top employees.
With $42.7 billion under management, Och-Ziff Capital Management is not only one of the largest hedge fund firms in the world, it is one of the only publicly-traded hedge fund firms. That means that the compensation of stars like Levin is publicly-disclosed and that a firm like Och-Ziff can reward him with publicly-traded stock.
Och-Ziff’s main hedge fund, which has trailed the performance of the U.S. stock market in recent years, is up 0.31% in 2014 through March, an SEC filing show. But shares of Och-Ziff have increased by 30% in the last year as the firm attracted billions of dollars of new assets.
Levin’s work has contributed to the bump in assets at Och-Ziff, which now manages some $4.4 billion in its dedicated credit funds. Some have questioned the ability of publicly-traded alternative asset managers to deliver good results to two different constituencies -- investors in their stock and investors in their funds.
A computer science graduate from Harvard, Levin got a job in finance at Sagamore Hill Capital Management , according to Levin’s bio on Och-Ziff’s web site. He also worked as a distressed debt and statistical-arbitrage analyst at Dune Capital before joining Och-Ziff Capital Management in 2006.
Last year, Och-Ziff hired Semler Brossy Consulting Group as a third-party advisor to help advise the hedge fund firm in connection with Levin’s promotion and new compensation package. Levin reached a deal with Och-Ziff in late January of 2013.
Och Ziff’s compensation committee relied on the advice it got from Semler Brossy to determine that Levin’s stock awards “would create an appropriate ongoing alignment between Mr. Levin and our shareholders and fund investors by encouraging him to make managerial decisions that support the preservation and growth of our long-term market value and to provide continued investment thought leadership for investors,” an SEC filing says.
Levin did not earn a salary last year and was paid $64,617 in cash compensation, an SEC filing shows. Och-Ziff granted 12 million operating Group D retention units to Levin in 2013 that converted into Group A units in May 2013 and vest in 10 equal annual installments starting in January 2014. He also got another 7 million retention units that vest over nine years. In total, Levin held unvested Och-Ziff shares valued at $232 million at the end of 2013, an SEC filing shows.
More from Forbes
- The Highest-Earning Hedge Fund Managers And Traders
- The World's Hedge Fund Billionaires 2014
- New York Hedge Funds Win Job Cuts In Silicon Valley
Good compensation is great. However, this kind of awarding pattern may mislead people to take unreasonable risk. My focus is really on "One Big Bet with others money".
If we allow people to make one big bet and they can be compensated greatly. Is it an encouragement for them to gamble or take "great risk" for it ? Unfortunately, if the bet goes south, one may lose his job but other lost billion of $. Most people would incline to take a huge bet in their life and think they did the right thing. However, it was the huge reward that worth a life time work (or many life time for others ) that would cloud their judgment.
I believe such huge reward should be granted only based on many successes along with some acceptable failure. Take risk is good in investment but the risk needs to be capped. we are just human and the temptation is just too great.
Good job and congratulations on making good decisions.
Now let the haters rain in.
in a free-market system, the question is this: do all investors have access to the same information and the same trade as mr. levin? if so, pay the man ... if not, recognize that the system is broken, not policed well enough and sooner or later will benefit only the few and harm the nation ...
wake up America ...
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Tighter regulations and the end of a lengthy bull market in bonds have changed the landscape forever.
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