Bonus Watch '15: Pimco Brass

Compensation for senior execs has taken a hit and it's (allegedly!) all Bill Gross's fault.
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When Bill Gross left Pimco last year for Janus, the employees he left behind lost a log of things, many of them of the variety you can't put a price on. They lost working for a guy who enforced a no talking or eye-contact rule. They lost living in fear they'd be issued a demerit for leaving of a "p.33" on a 300-slide presentation. They lost their proximity to an auteur who wrote letters on a variety of topics ranging from the evils of the automatic flushing toilet to erotic pleasure of a good sneeze, to stiffing waitresses, to the cellulite on his back, and the fact that it made him want to shoot himself. These are the things they lost to which no value can be assigned. Their presumed bonuses are another story:

The ouster last year of Gross, the mutual fund giant’s mercurial founder, caused investors to yank tens of billions of dollars out of the company, particularly the Total Return Fund, which Gross personally managed. The sharp decline in assets has not only squeezed profit at PIMCO, and its holding company, Allianz SE, but caused dozens of senior executives at PIMCO to lose out on an estimated tens of millions of dollars in compensation, people with direct knowledge of the matter tell FOX Business. Over the past three to five years, executives received as much as a third to half of their annual pay in a stock-option tied to assets under management. But with assets dropping sharply in the wake of Gross’s departure, those options expired in January, making them virtually worthless, these people say. People inside PIMCO suspect that as many as 200 executives at the company have lost money as a result of their options falling “out of the money," or in other words, losing any value. The exact total of lost compensation, according to one person, could “easily exceed $100 million.”

Bill Gross is Costing PIMCO Senior Execs a Lot of Money [FBN]



PIMCO: Bill Who?

Bill Gross increasingly furious that his old firm keeps texting back "New phone, who dis?"

Bonus Watch '13: LightSquared

LightSquared is a wireless venture that seeks to create "convenient connectivity for all." Unfortunately, as the Wilbur Falcone fans among us know, it's looking like it'll be a dark day in hell before that happens, on account of bunch of forces working together to shut this thing down at every turn, including but not limited to the yachting community that claims GSP interference caused by LS will result in boats getting lost at sea; the National Oceanic Atmospheric Administration, which has said LightSquared "may degrade precision services that track hurricanes, guide farmers and help build flood defenses"; and the FAA, which recently put out a study estimating LS could “cost 794 lives in aviation accidents over 10 years with disruptions to satellite-aided navigation.” Also not helping is that LightSquared filed for bankruptcy in May, the company is blowing through cash faster than Wilbur's Studio 54 days, and senior executives won't stop quitting. While some people might take stock of the situation and decide, at this point, to throw in the towel, Wilbur Falcone's benefactor is not some people. He's making this thing work if it's the last thing he does. So, what to do? Obviously a couple of miracle workers are going to be needed and the thing about miracle workers is that they don't come cheap. Gotta spend money to make money. Troubled wireless-satellite company LightSquared wants permission to dole out up to nearly $6 million in cash bonuses to four of its top employees, including its interim chief executive. Recent months have seen LightSquared burn through money--it has spent $134.3 million since filing for bankruptcy in May, according to its most recent monthly operating report, and executives alike. In court papers filed Wednesday, LightSquared said four senior executives have left the company in the past six months, including its former chairman of the board and CEO. The company wants to make sure four "irreplaceable employees" stick with the company as it attempts to claw its way out of bankruptcy protection and help to make the reorganization as fast and cheap as possible. LightSquared's bonus proposal paves the way for a "total possible cash payout of approximately $5.985 million" over two years, according to a filing with the U.S. Bankruptcy Court in Manhattan. Four employees--interim CEO, president and chairman of the board Douglas Smith; Chief Financial Officer Marc R. Montagner; general counsel Curtis Lu; and its executive vice president, regulatory affairs & public policy Jeffrey Carlisle--would be eligible for incentives consisting of cash and restricted stock units paid in shares of the company's current common stock. If the executives satisfy cash preservation goals, make progress in LightSquared's efforts to resolve certain regulatory issues and emerge from bankruptcy by the end of 2013, they'll receive vesting of all issued stock and "aggregate incentive payments of cash up to 285% of each such key employee's annual salary," LightSquared said. Hitting less aggressive goals, like exiting bankruptcy by the end of June 2014, would come with smaller payouts, like a cash bonus equal to 100% of the executives' annual salary, in the case of the mid-2014 bankruptcy exit. Mr. Smith currently makes $700,000 annually; Mr. Montagner and Mr. Lu $500,000 each; and Mr. Carlisle $400,000. LightSquared said each of the employees "provides critical services, drives performance, and impacts LightSquared's ability to enhance value in the Chapter 11 cases." The group has also had to take on extra work recently, as more and more employees have left LightSquared both voluntarily and involuntarily. The company said its total employee headcount has dropped by 60% in the last six months. The bonus plan aims to motivate the company's leaders to manage its businesses and working capital effectively and maximize the value of the estate for the benefit of all stakeholders, LightSquared said. LightSquared Seeks to Pay Key Executives up to $6M in Bonuses [DowJones]