(Bloomberg) -- Ken Griffin’s Citadel prolonged its non-compete agreements for some portfolio managers to 21 months, underscoring the unrelenting hiring war among multistrategy hedge funds.
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The firm’s non-competes averaged one year in 2020, though some managers had to sit out as long as 18 months to get their deferred compensation. Citadel’s latest extension is longer than rivals’ policies, which are closer to 12 months, according to people familiar with hiring practices.
A spokesperson for Citadel declined to comment.
The competition for talent at multistrats is intense, with investment headcount at those firms up 13% in the 12 months ended June 30, according to a recent Goldman Sachs Group Inc. report. Firms are poaching talent from one another to fill high-level roles.
Multistrats are enticing senior portfolio managers with upfront guarantees, buyouts of unvested deferred compensation and a limited step-up in the percentage of profits a portfolio manager takes above the normal level — which at some firms can exceed 20%, Goldman said.
To keep these employees in their seats once they join, firms wield non-competes and other tactics such as bonus clawbacks.
Last year, Eisler Capital unleashed a rule requiring traders to potentially repay their 2023 bonuses if they departed before the end of 2024. ExodusPoint Capital Management recently expanded a similar clawback to its senior non-investment staff.
While the Federal Trade Commission banned non-compete clauses last year, it made an exception for mandatory garden leaves — as long as firms keep paying departing employees normal wages during their required time out. A federal judge blocked the ban in August, and the FTC appealed the ruling.
(Updates with judge’s ruling on the FTC’s non-compete ban in final paragraph.)
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