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Daniel Godfrey follows Woodford on scrapping bonuses


Former Investment Association chief executive Daniel Godfrey has confirmed his planned investment trust will follow in the footsteps of Woodford Investment Management and not pay staff bonuses.

Godfrey, who plans to launch the investment trust in the first quarter of 2017, told the Financial Times staff would be on a fixed salary and “there will be nothing they can do to earn more money”.

This week Woodford said it had abolished staff bonuses as it could find no evidence that they result in better outcomes for investors. The move was introduced in April for the company’s 35 staff, including sales people, fund managers, analysts and compliance staff.

Woodford chief executive Craig Newman said many studies suggested bonuses can lead to short-term decision making and that the firm wanted to do “something different” that supports the firm’s culture and ethos of challenging the status quo.

For the year to March 2015, Woodford paid a total of £6.8m in staff wages, which works out as an average of £225,000 for each employee. All staff opted into the new pay scheme, which saw salaries increase so that the move would be cost neutral and on average no employee would be worse off.

Earlier this year, Godfrey told Money Marketing sister publication Fund Strategy he is exploring the possibility of how a trust could be used to provide a truly mutual investment fund and that he wants to develop a new structure where investors are placed at the centre and the trust is not governed by shareholders.

He said: “The idea of an investment fund that does not have any shareholders sitting above could enable you to do some quite interesting things, particularly as a very long-term investment theme.”



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There are 2 comments at the moment, we would love to hear your opinion too.

  1. Unremarkable that staff opted in to a scheme that gives permanence to former bonuses. However, contrary to the quotes, there is ample academic evidence incentives can work – Google it. The problem is most bonus schemes are badly constructed, not monitored and assessed for effectiveness, and in particular don’t allow middle and back-office staff to understand how their efforts have contributed to the relative success of the business.

    Getting rid of bonuses – and especially justifying it by insubstantial academic reference and the lazy use of “behavioural’ – is simply admitting that your HR department hasn’t a clue, and that relating rewards to individual assessment is too much like hard work.

  2. OK fine it’s a personal choice ….. Or is it ?

    The day the FCA scrap there bonuses, expenses and freebies (inducements). Then and only then would I concider following suit

    Really just how far are we going with all this nonsense ?
    Commission gone, bonuses gone, inducements gone, trail going,

    What next, staff benefits ? Pay rise above national average ? Expenses ?

    For what ? Are we really in a better place ?

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