Employee compensation eats up profits at high-flying Citadel: The heavy cost behind the $5.3 billion revenue.

According to the bond issuance documents, the operating costs of Citadel's three flagship multi-strategy funds increased by 4% last year, reaching nearly $4.5 billion. Although the detailed breakdown of compensation costs is not included in the preliminary annual data, if the expense ratio from the first nine months of last year is applied, the compensation costs are approximately $3.8 billion, which is basically unchanged from the previous year. The net investment returns of these three funds decreased by 14% compared to the previous year, to $11.1 billion. The combination of declining returns and rising costs resulted in a 22% decrease in the total net profit of these funds, falling to $5.3 billion.