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.”