WSJ Spotlights Fund Bigwigs' Pay
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Thursday, February 19, 2009

WSJ Spotlights Fund Bigwigs' Pay

$1- a-year salaries? Not in the mutual fund industry. In Thursday's Wall Street Journal, Diya Gullapalli notes that while fund executives saw a decrease in their pay, the austerity that has swept through parts of the financial industry hasn't hit fundsters as hard.

Fund executives' compensation is attached to the company's profitability, not just funds' performance, so while portfolios slump and some investors yank their money, most executives continue to "draw profits creamed from fund assets," Gullapalli writes. Also, most executives in the industry haven't been drawing on TARP money.

Duncan Richardson, chief stock investment officer of Eaton Vance, took home $3.7 million in 2008, most of which came from a cash bonus. That was down 20 percent from a year earlier. Eaton Vance's 30 or so stock funds were in the red for the year through October. An Eaton Vance spokeswoman told Gullapalli that despite the decline, most of the funds did well compared with peers and market benchmarks, and she added that Eaton Vance saw strong sales in 2008.

Legg Mason's Bill Miller made as much as $30 million yearly through March 2007, according to Gullapalli. For the fiscal year ended March 2008, he received nearly $5 million due to a revenue sharing agreement that largely ties his pay to his unit's overall performance, she reports, citing unnamed sources. A spokeswoman for Legg said the firm's honchos will take big pay cuts this year and Miller's will be the largest.

For his part, Franklin Resources CEO Gregory Johnson earned $5.3 million for fiscal 2008 through September while several of the company's 115 mutual funds were losing money, Gullapalli notes. Johnson received a $2.1 incentive bonus, in part due to the company beating a 33 percent operating margin target, and $2.4 million due the firm's operating income hitting a record high. Johnson's pay for fiscal 2008 was 35 percent lower than what he took home in 2007, a Franklin spokeswoman said.

Over at State Street, which was one of the recipients of TARP funds, 2008 pay numbers have not been released yet. CEO Ronald Logue's total compensation in 2007 was $20.5 million and he will receive $1 million in salary for fiscal 2008 ending December.

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