A November 14th article from Bloomberg reporter Mary Childs highlights that Pacific Investment Management Co. (PIMCO) paid its former Chief Investment Officer Bill Gross a gigantic $290 million bonus in 2013, despite the fact that PIMCO’s Total Return Fund was in the bottom 35% of comparable bond funds for 2013. Bloomberg derived the bonus information from documents supplied by a source with intimate knowledge of the firm’s compensation and bonus policies.
Statement from PIMCO
“While Pimco does not comment on compensation, the figures provided to Bloomberg are not correct,” noted Dan Tarman, a spokesperson for West Coast-based Pimco who refused to provide further details. “For more than three decades, Pimco’s managing directors have maintained a substantial interest in the firm, currently 30% of profits, and this provides an important means to attract and retain the best investment talent to serve our clients.”
Neither Gross, who is now employed by Janus Capital Group Inc (NYSE:JNS), nor El Erian responded to phone calls from Bloomberg. Janus also declined to comment.
Very high compensation compared to peers
For comparative purposes, Laurence D. Fink, CEO of BlackRock Inc., the world’s largest money manager, received $22.9 million in 2013 compensation, and Michael Diekmann, CEO of PIMCO owner Allianz SE, was paid 7.2 million euros ($9 million).
Daniel Ivascyn, PIMCO’s new chief investment officer, who was hired after Gross’s resignation on Sept. 26, earned a bonus of about $70 million in 2013, according to the documents. Ivascyn had been managing the $39.3 billion PIMCO Income Fund, which outperformed 99% of peers last year, returning more than 4.8%.
The chief of PIMCO product management, Wendy Cupps, was given a bonus of nearly $50 million. Also of note, Douglas Hodge, who was chief operating officer until he took over as CEO in January, earned a bonus of $45 million, and the firm’s President Jay Jacobs was given about $22 million.
The extremely generous bonuses doled out at PIMCO last year are in the same ballpark as the over-the-top compensation at leading global hedge funds and private equity funds. For example, Leon Black of Apollo Global Management LLC (NYSE:APO) received around a stunning $369 million in distributions from his stock ownership of the company last year. Steve Schwarzman of the The Blackstone Group L.P. (NYSE:BX) took home a princely $374.5 million in pay and cash dividends.