Man Who Paid Himself $3.9 Billion To Run Hedge Fund Thinks Guy Running Hedge Fund Is Overpaid

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Man Who Paid Himself $3.9 Billion To Run Hedge Fund Thinks Guy Running Hedge Fund Is OverpaidAlso, the same man who failed to notice the continent-wide bribery ring run by his lieutenant isn’t impressed with the hedge fund’s corporate governance.

• Author:Jon Shazar
• Publish date:Aug 25, 2022

Also, the same man who failed to notice the continent-wide bribery ring run by his lieutenant isn’t impressed with the hedge fund’s corporate governance.

Once upon a time, there was a hedge-fund whose hand-picked board of directors paid him lavishly in spite of piss-poor returns, a swooning stock price, and spectacular failures in corporate governance up to and including a succession plan that failed to consider other candidates. That’s not our precis on Daniel Och’s tenure at his formerly eponymous hedge fund. Instead, it’s Och’s breathtakingly un-self-aware summary of that firm’s current CEO and his stewardship of the hastily-renamed Sculptor Capital Management.

Since taking the reins in April 2021, [Jimmy] Levin has “devoted himself to entrenching his position at the company, shaping the board of directors, and wielding that resulting leverage to extract ever-escalating pay packages,” the former executives alleged. “Yet, while bringing massive returns to his own pocket, Mr. Levin has delivered less than mediocre performance to the limited partners in Sculptor’s investment funds, and the company’s stock price has collapsed….”

The former executives of the firm, previously known as Och-Ziff, said they want to probe whether the board broke its duty to shareholders by failing to consider other CEO candidates or conduct proper succession planning.

That’s pretty rich coming from Och, given that the CEO in question is the former waterskiing instructor he groomed and anointed his successor, before deciding that Levin had become too big for his board shorts as the details of what was then Och-Ziff’s pan-African bribery program became clear. Especially given that Och’s succession plan became “sticking it to Jimmy Levin” and hanging around long enough to almost blow up the firm a second time before hastily bailing as Och-Ziff shares approached pink-sheet status. And that’s not the only bone he’s got to pick!

They also noted that seven directors have left since January 2020, including five who resigned in the middle of their terms.

“Levin has capitalized on these departures to appoint directors who appear handpicked to serve his interests,” according to the lawsuit.

Again, a bit tough to take given that one of those departures—of Och’s own hand-picked director, presumably there to serve his interests—resigned on what one must assume were Och’s orders as part of Och’s first move in this latest iteration of his blood feud with Levin.

To be sure, Och’s got some legitimate gripes: Levin’s pay package allegedly topped $145 million last year—although Sculptor notes that most of it is deferred—even as the hedge fund lost money and seen its shares fall by more than half since Levin took over. Even proxy advisory ISS has its concerns about Levin’s unusual pay package and structure. Still, it’s a bit hard to take from the man who presided over a 97% decline in share price. Still, you’ve got to admire Och’s chutzpah, even after accounting for the fact that he’s got plenty of free time on his hands and probably a blockchain-shaped hole in his bank account.

The former executives also said in the complaint that it’s “necessary to understand how the board has gotten to this point,” and that Levin’s tactics “have harmed, and are continuing to harm, Sculptor’s returns for its limited partners.”

Perhaps a look in the mirror would help explain it, Danny.

Hedge Fund Founder Och Sues Sculptor Over CEO’s ‘Ever-Escalating’ Pay [Bloomberg]

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Tagsterms:James LevinHedge FundslawHypocrisyDaniel OchSculptor Capital ManagementSuccessionCompensationlitigationcorporate governance

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