Pinetree Capital, an investment fund with a portfolio worth $794 million, paid its CEO Sheldon Inwentash $34.6 million in 2010.By comparison, the CEO of BlackRock, Larry Fink, made $23 million last year, making him the highest paid Wall Street CEO in 2010. Pinetree Capital is tiny compared to BlackRock.
Of course Pinetree doubled the size of its investment portfolio last year, and it’s investment focus is in commodities (mostly Precious Metals, Base Metals, Oil & Gas, Potash, Lithium and Rare Earths, Uranium and Coal), which performed well last year. So it’s not surprising that Inwentash made a lot ($32.2 million in a bonus; $1 million in salary).
What’s surprising is how the firm changed his pay structure, and how much more Inwentash made than his top employees.
Before 2010, he was entitled to 10% of the company’s “realised per-tax profit,” according to the Financial Post. Now he gets 10% of the firm’s growth. The four top execs made $365,000 in total.
Here’s how the firm explained the calculation of the new compensation structure to investors (Pinetree is public), according to the Financial Post:
In assessing the adequacy and competitiveness of the chief executive’s overall compensation package … the Compensation Committee reviewed the practices of a comparative group of funds which were chosen based on their size and investment focus, with a view to providing a spectrum of compensation data.
The end number, $34.6 works out to about 10% of the increase in Pinetree’s shareholders equity over the 12 months ended Dec. 31 2010 (with some items excluded from the calculation).
Usually asset managers take around 20% of the firm’s profits. The way Inwentash’s new structure works, it’s as if new asset growth is counted as profit.