| Ken Griffin's Citadel is requiring non-compete agreements of as long as two years for investing staff, including some analysts, one of the more aggressive constraints among multistrategy hedge funds seeking to prevent employees from defecting to rivals. In an unusual move, the length of the garden leave is tied to the employees' total compensation, according to people familiar with the matter. The more the portfolio manager or analyst earns, the longer the non-compete, the people said, asking not to be identified discussing confidential details. The minimum leave for analysts is one year. A representative for Miami-based Citadel declined to comment. At many large hedge funds, analyst non-competes tend to be between nine and 12 months. Citadel's terms are already rankling other firms. One founder of a multibillion-dollar hedge fund called Citadel's lengthy analyst sit-outs predatory and an abuse of leverage over young people. The founder, who asked not to be identified speaking about another firm, said he viewed the move as going beyond just protecting the business. Citadel, which manages about $71 billion, is known for having some of the industry's most restrictive employee contracts. In 2020, its non-competes for portfolio managers averaged one year, though some of them faced 18-month leaves in order to receive their deferred compensation. Early last year, the firm extended some of those agreements to 21 months. ALSO READ: World's Largest Jeweller Shares Jump 55% In Three Months After Trading Silver For Platinum Even if employees don't like the long non-competes, Citadel's track record of big gains and rich rewards can often entice them to sign on. The firm's three main multistrat funds racked up roughly $4 billion annually in compensation expenses in recent years, according to figures disclosed in bond prospectuses. Griffin was also one of the biggest proponents of a Florida bill that pushed for garden leaves of as much as four years, hiring lobbyists who helped write the legislation and advocate for its adoption. It became law in July 2025. The competition for talent at multistrats is intense, with demand for investment professionals rising as assets continue to climb. To keep those employees in their seats, firms wield non-competes and other tactics such as bonus clawbacks for those who quit within a certain period after receiving the payout. Retaining talent is one reason for non-competes. Protecting intellectual property is another. Citadel is in a legal dispute with former portfolio manager Daniel Shatz, whom it accuses of stealing confidential information as he prepared to join a rival firm. Shatz alleged that Citadel retaliated against him for complaining about possible securities violations by withholding his deferred compensation. People earlier in their careers might not appreciate the long-term implications of these non competes, according to Jason Kennedy, who helps hedge funds with recruiting. An analyst looking to switch jobs might find that recruiters won't even look at them if they're at the longer end of the leave range. "Locking them up for two years can effectively kill their career," Kennedy said. "Every day they sit out they reduce their market value." ALSO READ: Chips Power Nasdaq Surge: SanDisk, AMD, Micron, SK Hynix Extend Rally With Up To 5% Gains (Updates with comments from hedge fund founder in fifth paragraph, compensation expenses in seventh, legal dispute involving former employee in 10th.) |
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