Och-Ziff Capital Management

Och-Ziff Capital Management Group is a global hedge fund and alternative asset management firm. The firm operates multiple investment strategies, including merger arbitrage, convertible arbitrage, equity restructuring, credit and distressed investments, private investments and real estate.

http://en.wikipedia.org/wiki/Och-Ziff_Capital_Management

theglobalopinion.com lists David Och as being the highest compensated executive in the world, with a total compensation of $918,939,482 for 2008. That's just shy of 1 billion dollars for one year. They list the compensation for the top five executives at Och-Ziff as follows:

Daniel Och, Chairman of the Board, Chief Executive - $918,939,482
David Windreich, Executive Managing Director - $212,641,737
Michael Cohen, Executive Managing Director - $127,237,703
Zoltan Varga, Executive Managing Director - $76,925,681
Joel Frank, Chief Financial Officer, Executive - $40,785,696

http://www.theglobeopinion.com/section/business/executive-compensation?tid=Och-Ziff+Capital+Management

That's a total compensation of $1.377 billion dollars for five individuals for the year 2008.

What have they done to deserve that princely amount? According to Wikipedia:

"Och-Ziff completed an initial public offering in 2007, listing its shares on the New York Stock Exchange initially at a price of $32.00. The firm was one of the few hedge funds and private equity firms that were able to complete successful IPOs before the onset of the capital markets downturn in 2007. The company's stock has declined significantly since the IPO, reaching its year-to-date low of $4.02 on October 27, 2008. The firm laid off a significant number of professionals in December 2008.

According to New York Times from January 5, 2009, Och-Ziff’s asset base shrank by $5.5 billion in December 2008 to $22.1 billion as of Jan. 1, a drop of 20 percent over just one month’s time."

Wikipedia also shows the 2008 performance of three OZ funds:
OZ Master Fund, Ltd. -22%
OZ Europe Master Fund, Ltd. -15%
OZ Asia Master Fund, Ltd. -28%


I'm not sure exactly what my point is with this post, but if someone can be compensated to the tune of nearly 1 billion dollars for such dismal performance, then there is something seriously wrong here.

Originally posted by rwingett
Och-Ziff Capital Management Group is a global hedge fund and alternative asset management firm. The firm operates multiple investment strategies, including merger arbitrage, convertible arbitrage, equity restructuring, credit and distressed investments, private investments and real estate.

http://en.wikipedia.org/wiki/Och-Ziff_Capital_Management

thegl ...[text shortened]... billion dollars for such dismal performance, then there is something seriously wrong here.

The New York Mets were compensated about a billion dollars over the course of the last decade; and how did they do?

looks like he can withdraw whatever amounts he deems sufficient, until a higher power gets fed up with him.

wikipedia

Investment funds

As of December 2, 2008, according to its Form 8-K filing with the SEC, fund performance was as follows:
Fund YTD 2008 2007
OZ Master Fund, Ltd. -22% 12%
OZ Europe Master Fund, Ltd. -15% 12%
OZ Asia Master Fund, Ltd. -28% 12%

well, they are not doing so bad compared to the others, apparently. 🙂

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http://dealbook.blogs.nytimes.com/2009/01/05/och-ziffs-assets-fell-by-55-billion/

Och-Ziff’s Assets Fell by $5.5 Billion
January 5, 2009, 10:05 am

...

It turns out that Och-Ziff’s asset base shrank by $5.5 billion in December to $22.1 billion as of Jan. 1, a drop of 20 percent over just one month’s time.

The numbers reflect two things — withdrawals and market losses — so it’s not clear how much of the decline was because investors yanked their money out of Och-Ziff’s funds.

But even Och-Ziff’s worst-performing fund (its Asia fund) was down just 3.5 percent in December, so it seems clear that a lot of investors pulled their cash before they rang in the new year.

Och-Ziff is just one of many successful hedge-fund firms whose strong track record was broken in 2008, as the markets lurched in unexpected ways, undermining their trading strategies. As of a year ago, the annualized average return at its flagship fund, the OZ Master Fund, was about 16.5 percent, regulatory filings show.

But the OZ Master Fund ended 2008 down 15.5 percent — which is actually not so bad considering what was going on in the broader markets and at rival hedge fund firms. That includes a 1.55 percent decline in December.

In fact, Och-Ziff’s relatively decent performance may have have helped it avoid the tsunami of redemption requests that have hit other funds. Many hedge funds have gotten requests to redeem one-third of their assets under management and sometimes considerably more; in some cases, the funds have halted redemptions to avoid having to sell assets at fire-sale prices.

...

also, some of the 2008 compensation was probably awarded on the base of good 2007 performance.

also, if he's cashing out stock options, etc., the company doesn't have much control once they've
awarded the options, do they?

http://en.wikipedia.org/wiki/Hedge_fund

...

Fees

A 'Hedge Fund' Manager will typically receive both a Management Fee and a Performance Fee (also known as an Incentive Fee) from the fund. A typical Manager may charge fees of "2 and 20", which refers to a management fee of 2% of the fund's Net Asset Value each year and a performance fee of 20% of the fund's profit.[2]

...

Performance fees

Performance fees (or "incentive fees"😉 are one of the defining characteristics of hedge funds. The manager's performance fee is calculated as a percentage of the fund's profits, usually counting both realized and unrealized profits. By incentivising the manager to generate returns, performance fees are intended to align the interests of manager and investor more closely than flat fees do. In the business models of most managers, the performance fee is largely available for staff bonuses and so can be extremely lucrative for managers who perform well. Several publications publish annual estimates of the earnings of top hedge fund managers.[7][8] Typically, hedge funds charge 20% of returns as a performance fee.[9] However, the range is wide with highly regarded managers charging higher fees. For example Steven Cohen's SAC Capital Partners charges a 35-50% performance fee,[10] while Jim Simons' Medallion Fund charged a 45% performance fee.

Performance fees have been criticized by many people, including notable investor Warren Buffett, who believe that, by allowing managers to take a share of profit but providing no mechanism for them to share losses, performance fees give managers an incentive to take excessive risk rather than targeting high long-term returns. In an attempt to control this problem, fees are usually limited by a high water mark.

As the hedge fund remuneration structure is highly attractive it has been joked that hedge funds are best viewed "... not as a unique asset class but as a unique ‘fee structure’".

...

Originally posted by sh76
The New York Mets were compensated about a billion dollars over the course of the last decade; and how did they do?

They finished in the top three in their division 6 times out of 10. They made the postseason twice, including the World Series once, which they lost in 2000. In other words, better than a lot of other teams. Plus that's compensation for 25+ guys over a decade, as opposed to one man for one year.

Originally posted by rwingett
They finished in the top three in their division 6 times out of 10. They made the postseason twice, including the World Series once, which they lost in 2000. In other words, better than a lot of other teams. Plus that's compensation for 25+ guys over a decade, as opposed to one man for one year.

I think they got that compensation because they were the owners and decided to float 20% of the company. So it's not for this year, but for the years they spent building the company's value.

Still, for those types of income I'm in favour of a large tax rate.

Originally posted by Palynka
I think they got that compensation because they were the owners and decided to float 20% of the company. So it's not for this year, but for the years they spent building the company's value.

Still, for those types of income I'm in favour of a large tax rate.

Ever the apologist for Dives, aren't you? As long as there is a Lazarus starving outside his door, no amount of tinkering with the tax code will absolve Dives of his sins.

Originally posted by rwingett
Ever the apologist for Dives, aren't you? As long as there is a Lazarus starving outside his door, no amount of tinkering with the tax code will absolve Dives of his sins.

😴

Originally posted by Palynka
😴

Hey, that's my line 😠

Originally posted by rwingett
Hey, that's my line 😠

http://hollywoodjesus.com/movie/little_nicky/cross.jpg

Originally posted by rwingett
Ever the apologist for Dives, aren't you? As long as there is a Lazarus starving outside his door, no amount of tinkering with the tax code will absolve Dives of his sins.

Daniel Och is the Senior Managing Member on the Board of Directors of the Robin Hood Foundation, so he's not exactly ignoring Lazuras. How does that fit your meme? I'm sure he's done more to help the poor than you ever will, so you sitting in judgment of his "sins" is pretty freaking laughable.

From Wikipedia...

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The Robin Hood Foundation is a charitable organization which attempts to alleviate problems caused by poverty in New York City, New York. The Robin Hood Foundation was featured in Fortune's 18 September 2006 issue where the article states that the foundation is "one of the most innovative and influential philanthropic organizations of our time."
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http://en.wikipedia.org/wiki/Robin_Hood_Foundation

Originally posted by Sleepyguy
Daniel Och is the Senior Managing Member on the Board of Directors of the Robin Hood Foundation, so he's not exactly ignoring Lazuras. How does that fit your meme? I'm sure he's done more to help the poor than you ever will, so you sitting in judgment of his "sins" is pretty freaking laughable.

From Wikipedia...

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The Robin Hood Foundation is organizations of our time."
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http://en.wikipedia.org/wiki/Robin_Hood_Foundation

I'm not pulling down a billion dollars a year either. If we took my best year, it would take me 20,000 years to make what Och made in one year. That's sometime from the Middle Paleolithic Age until now. So whatever crumbs Och lets fall on this Robin Hood Foundation may assuage his guilty conscience, but they are wholly insufficient to absolve his sins. You may prostrate yourself before him in supplication if you wish, but you'll have to excuse me for not joining you.