NYAIR Episode 21
Compensation Structures and Their Implications for Alternative Asset Managers
How do leading alternative asset managers structure compensation, partner economics, and incentives to drive retention, performance, and compliance? In this NY-AIR episode, Greg Kastner (formerly Senior Tax Manager, Financial Services, Baker Tilly) and Tim from TriNet unpack proprietary benchmarking, current pay strategies, profit interest pitfalls, and trending approaches to bonus, vesting, and clawbacks—plus what alternative firms must consider in a turbulent regulatory landscape.
Featured Guests
Greg Kastner
Senior Tax Manager (former), Financial Services, Baker Tilly
Greg Kastner is a recognized expert in fund and firm compensation planning, with extensive experience advising hedge funds, private equity managers, and high net worth professionals on tax-optimized pay, incentive structures, and entity choice. His past leadership at Baker Tilly, BDO, and other national tax practices gives him unique insights into industry benchmarking, partnership allocations, W-2 vs guaranteed payments, and the impact of new tax law on alternative investment compensation.
Key Insights From This Episode
Dual Revenue Streams Determine Pay Mix
Alternatives firms typically pay compensation from (1) management fees (subject to self-employment and local business tax); and (2) incentive allocations/carried interest (preferential capital gains treatment if structured and vested properly).
Partnership vs W-2: More Than Just Taxes
Paying people as partners (with guaranteed payments or profit interests) introduces tax flexibility—but carries administrative, legal, and exposure risks (return access, partnership duties, filing in multiple states).
Vesting, Forfeiture & Clawbacks—Planning for Mobility and Misconduct
Effective compensation schemes address how unvested profits/bonuses are handled when employees resign, retire, or breach loyalty. Vesting schedules (cliff or graded) and clawback provisions are essential for long-term retention and legal protection.
Benchmarking: TriNet’s Proprietary Data Reveals Trends
Detailed compensation benchmarking by role, region, and firm size is critical for competitiveness, retention, and rewarding “superstar” contributors. Performance pay must be aligned to firm economics, business model, and risk appetite.
Partnership Audit Rules Create New Liabilities
New IRS rules may bind incoming partners to tax liabilities for prior-year mistakes, heightening the need for up-to-date agreements, opt-outs, and careful admission processes.
Strategy Is Not “One Size Fits All”
Every fund’s liquidity, asset mix, and growth stage demands a bespoke approach—balancing immediate cash with deferred profits, discrete team vs. firmwide targets, and the realities of competitive hiring.
Access the Full Conversation
Listen to the episode and download your insights deck with compensation models, sample schedules, and tax compliance checklists for alternative asset managers and HR leaders.
Soundbites Worth Saving
“Proper structuring means your superstars get rewarded—but without exposing the partnership or other key employees to unnecessary risk or compliance headaches.”
— Greg Kastner
“Vesting and clawbacks aren’t just defense tools—done right, they create a culture of ownership, retention, and shared long-term success.”
— Greg Kastner
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