Dispute Over Gross’ $290M Bonus Report

PIMCO says its two former top executives did not earn nearly half a billion in bonuses in 2013, as has been widely reported.

PIMCO co-founder and former CIO Bill Gross took home a $290 million bonus in 2013 after lackluster performance, Bloomberg View reported, based on inside documents.

Likewise, Gross’ former right-hand man Mohamed El-Erian was said to have received $230 million in year-end incentive pay. 

According to the same source, the three managers under Gross and El-Erian also did well last year. Former Deputy CIO Daniel Ivascyn, who has since replaced Gross as CIO, reportedly earned $70 million, while PIMCO’s Global Head of Product Management Wendy Cupps received $50 million. Douglas Hodge, El-Erian’s replacement as CEO, was paid out $45 million, far outpacing PIMCO President Jay Jacobs’ $22 million.

PIMCO, however, has denied the accuracy of the now-widely reported figures.

“While PIMCO does not comment on compensation, the figures provided to Bloomberg are not correct,” the firm said in a statement. “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.”

Under Gross’ management, the firm’s flagship Total Return Fund had seen capital outflows and anemic performance in 2013, causing the reported bonus figures to raise eyebrows.

By the end of July 2014, just months before Gross departed, the flagship managed more than $225 billion, making it the world’s largest mutual fund—but performing in the bottom quartile of its peer universe. 

Since the messy breakup between PIMCO and its co-founder, both investor redemptions and performance have picked up for the Total Return Fund. Investors pulled a record $27.5 billion in October alone, with nearly half of that disappearing in the five days after the CIO stepped down.

The Total Return Fund has dropped in size by more than 40% since its April 2013 peak.  

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