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Major fund managers incur pay cut last year due to poor results but unknown for GIC & Temasek

Major funds in the world are slashing their CEO’s pay in view of the dismay performance of the investment industry last year, reported Financial News yesterday (‘Asset managers slash CEO pay after tough 12 months‘, 15 Apr).

Most of the asset management funds which are listed publicly like Man Group, Jupiter, SLA and Schroders saw their share price fall, as the investment industry had one of its worst years in 2018.

Their CEOs were forced to take pay cuts worth millions of dollars last year.

“Top bosses at Man Group, Jupiter Fund Management, Standard Life Aberdeen and Schroders had their pay packages crunched after they failed to substantially increase assets under management and revenues. All four investment companies experienced double-digit share price falls last year,” Financial News said.

Jupiter’s CEO removed

Luke Ellis, CEO of Man Group, had the biggest drop with his total pay halving to US$2.9m in 2018, down from US$6.2m in 2017. The company’s share price fell by more than a third last year, and assets under management decreased slightly to US$108.5 billion. Performance fees dropped by 63% to $122 million.

Maarten Slendebroek, the former CEO of UK-based Jupiter, also had a significant pay-cut in 2018 before he was replaced in March last month. Jupiter’s profits declined and assets under management fell 15% to £42.7 billion. Slendebroek was paid £1.9 million last year, down from £3.5 million in 2017. Slendebroek’s annual bonus of £1 million was also half of what he received the previous year.

Jupiter said in its annual report that total cash bonuses across the company amounted to £27.1 million in 2018, down 35% on 2017 resulting from “lower profitability”.

Martin Gilbert and Keith Skeoch, who until last month were co-CEOs of Standard Life Aberdeen, also saw reductions in their total pay after the £550 billion asset manager posted net outflows of £40.9 billion and a dip in pre-tax profits. Gilbert and Skeoch both received £1.09 million in 2018, down from the £1.3 million and £2.9 million they were paid respectively the year before. Last month, the company ditched Gilbert as the co-CEO leaving Skeoch now solely in-charge of Aberdeen.

Elsewhere, Peter Harrison, CEO of Schroders, had a 5% reduction to his bonus in 2018 to £6.2 million. Harrison was paid £6.7 million last year, down from £7 million in 2017.

Chairman and CEO Larry Fink of BlackRock Inc, the world’s largest asset manager, also had his total compensation cut. According to BlackRock’s calculation, Fink’s total compensation for last year fell by 14 per cent to US$24 million.

Actual management costs unknown for GIC and Temasek

In Singapore, two of the largest asset management funds GIC and Temasek, did not disclose the pay compensation of their fund managers. Hence, it’s not known if their pay compensation was increased or cut for last year.

But according to the latest Annual Report of Temasek (published in July 2018), it said that the “Administrative Expenses” in that year amounted to S$8.6 billion. Salaries and staff compensation will of course come under here but so would other fees like legal or rental. It was said that Temasek had a staff of 729 in its last FY.

According to KPMG, the auditors of Temasek, the company is not required to publish its financial statements as it is an exempt private company. In the statements, we can find details such as how much the top earners of the company for their annual pay-out.

As for GIC, its financial statements are not published publicly and audited by the Auditor General.

It’s not known why salaries or the actual management cost of the people running Singapore’s state funds continue to remain a “secret” even though the funds belong to the people of Singapore.