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Fund group bonus culture is ‘out of control’

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Bonuses paid to the bosses of the world’s biggest fund groups were 15 times larger than their salaries last year,analysis reveals.

Among 20 of the largest listed asset managers in Europe and the US, research by FTfm shows BlackRock’s chief executive Larry Fink and T Rowe Price chief James Kennedy had the highest level of variable pay to their fixed salary.

According to the report, Fink’s pay in 2015, which was made up of bonuses and share awards, was 2,766 per cent of fixed pay totalling $26m (£20m), almost 30 times his base salary.

Kennedy had a total pay of $9m, which was 2,399 per cent of his fixed pay for the past year.

Within Europe, Ashmore’s Mark Coombs emerged as the highest paid with a total pay of 1,837 per cent of his fixed pay at a total of £1.9m.

ShareAction senior policy officer Camilla de Ste Croix told the newspaper asset management bonus culture was “out of control”.

She says: “Following the financial crisis, a lot of new EU legislation and reforms were directed at the banking sector. The asset management sector has not faced the same level of scrutiny.”

The news comes after star fund manager Neil Woodford announced his firm will stop paying bonuses to senior staff in a review of the firm’s pay structure.

Before her appointment as Prime Minister, Theresa May pledged to place tighter controls on executive pay to ensure the country works not just for “the privileged few”.

In August, a Money Marketing research revealed a lack of transparency about how fund managers are paid, and lack of clarity on whether fund performance is the real driver behind pay.

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Comments

There are 4 comments at the moment, we would love to hear your opinion too.

  1. I don’t have an issue with bonuses, as such (although these do see excessive) if they contractual, then there may not be a lot you can do about unless you force people to alter staffs contracts !

    What does get up my nose, is the people who moan about these and jump up and down demanding change, are more often than not, have very large bonus system themselves…… we all know a “bonus” may come in very different guises, and quite often paid out regardless of performance and/or achievement!

  2. Whats your point DH? Two wrongs should make rip off culture’s alright?

    • Point is Steven, how can a bonus (or enhanced benefit) system be acceptable in some areas of our society and work place.

      But not in others ?

      What or how much is classed as excessive ? to label it as a rip off ? or is it just sour grapes ?

      Or should we just turn all industry, akin into a sports day for junior school children…. a world where we are all winners with no losers, a world where we all get the same irrespective of skill, stamina, or mindset ?

  3. Bonuses should be a way of aligning the remuneration of the individual with the aspirations, financial achievement, integrity and long term goals of the business. Most senior managers in most large businesses have Long Term Incentive Plans (LTIPs) to ensure this occurs. It is a balance of providing reward now and reward later against targets carefully set by the business (not focussed only on the financial) to ensure this is achieved. If the results that appear from using bonuses show short term thinking which is not in the interest of the business or a reward outside that which should be used to motivate the employee then the blame is with the organisation itself. Bonuses are like guns, they are a tool which can be used for good and bad purposes.

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