Yet another reason Pimco employees resent Bill Gross

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Bill Gross admittedly had a habit of rubbing some of his employees the wrong way when he was running Pimco. Whether it was discouraging eye contact and verbal communication, sending employees home to hand-write 1,000 times that they won’t again submit trade recommendations without charts, or publicly scolding them for not putting page numbers on presentations, they had reasons. Now they have one more, even though Gross is no longer working at Pimco.

Fox Business reported that Pimco employees could lose out on tens of millions of dollars in compensation due to asset redemptions that followed Gross’s departure. Pay cuts were certainly anticipated but not in the neighborhood of the $100 million number that was mentioned in the report.

The issue is related to the unique nature of Pimco’s compensation structure. Some executives receive as much as half of their annual pay in options tied to total assets under management, which have dropped precipitously though the hemorrhaging has slowed recently. Those options expired in January, “making them virtually worthless,” Fox reported.

Some within the firm are reportedly frustrated with the compensation plan, wishing instead that the options were tied to Pimco’s parent, Allianz, rather than a bond fund that could experience such an epic swing in assets.

But it’s not all bad at Pimco. One, eye contact is now openly welcomed, which is nice. Plus, the firm announced in November that it would hand out $279 million in payments to employees working below the managing director level who don’t participate in Pimco’s profit pool, so there’s that.

It appears those who will suffer most will be high-ranking employees who’ve been there a while. But Pimco is also bringing in a lot of new blood, so the number of those folks has likely dwindled.

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