Re: How do you explain the high salaries of hedge fund managers?
Thomas F. Cooley is the Richard R. West Dean and the Paganelli-Bull Professor of Economics at New York University Stern School of Business, as well as a Professor of Economics in the NYU Faculty of Arts and Science. He was appointed Dean of NYU Stern in 2002.
The former President of the Society for Economic Dynamics and a Fellow of the Econometric Society, Dean Cooley has received numerous awards for his teaching and is recognized as a national leader in both macroeconomic theory and business education. He is a widely published scholar in the areas of macroeconomic theory, monetary theory and policy and the financial behavior of firms.
Before joining NYU Stern, Dean Cooley was a Professor of Economics at the University of Rochester, University of Pennsylvania, and UC Santa Barbara. Prior to his academic career, Dean Cooley was a systems engineer for IBM Corporation. Dean Cooley received his BS from Rensselaer Polytechnic Institute, and his MA and PhD from the University of Pennsylvania. He also holds a doctorem honoris causa from the Stockholm School of Economics.
Question: How do you explain the high salaries of hedge fund managers?
Thomas Cooley: It's what they get for being successful. I mean, it's staggering, it's even an embarrassing large in some cases, but it is what they-- there are people who are willing to–– they're delivering the kinds of returns that lead to those kinds of salaries. I mean, it's kind of remarkable. Now, I mean, I think that the real questions are not the ones who are most–– I mean, even though they're earnings are extraordinary, they earned it by being successful. The real question is hedge funds that don't deliver better than average return that still–– where the managers still collect what they call 2 and 20, 2 percent management fee and 20 percent of the profits. But then, you know, it's let the investor beware, if people are willing to invest with them, then they're willing to go along with those kinds of rewards for successful hedge fund managers.
It's what they get for being successful, says Cooley.
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