The need to pay investment managers can twist normal compensation rules in knots.
The best of the best in investment management has the rule of the roost. From BlackRock to BlackStone, they’re sought after and often need to be brought into the fold through significant compensation.
MBAs typically rotate through a bunch of functional areas. Not least, there’s marketing, treasury, investment management and cash. But perhaps, given the recent emphasis on beating cash benchmarks, the real money is where the cash is.
Is that fair? After all, normal individuals have been excoriating investment management personnel for some time, for all manner of sins, from investing in Structured Investment Vehicles to Collaterized Debt Obligations. But individual investors have still attracted outsized compensation packages.
So what’s this mean for treasury? First, it’s difficult to compete against PIMCO, SSgA and BlackRock for talent. Second, there’s a conflict inherent in hiring for investment management when the scale of purchases is a clear issue in their success.
So how does one compensate a treasury investment manager? On the same scale as a hedge fund individual or a corporate investment person? This is the question—solved, to some extent, by the need to have an all-star exist within a corporate environment—which could force that all-star to make his or her own decision.