GAM Holding AG has cut its bonus pool to zero with the exception of contractual bonuses for fund managers, as the struggling asset manager seeks to contain costs before its takeover by a rival is finalized.
(Bloomberg) — GAM Holding AG has cut its bonus pool to zero with the exception of contractual bonuses for fund managers, as the struggling asset manager seeks to contain costs before its takeover by a rival is finalized.
The timing of the decision, which had been delayed from February, has caused “a degree of anger” among staff, Chief Executive Officer Peter Sanderson acknowledged on a call with employees Thursday, according to people familiar with the matter, who asked not to be identified discussing private information. He said the cut was necessary because of the firm’s financial results.
“It is a tough decision but it is essentially reflective of how fast that revenue drop was in the past year,” Sanderson said. “And the simple maths around the operating loss that we were running versus the runway that we needed to make sure the firm stays safe through the transaction.”
A spokesman for GAM declined to comment.
Keeping contractual bonuses for key portfolio managers may help to avoid further outflows of talent after the Swiss asset manager earlier this month agreed to sell itself to London-based Liontrust Asset Management for 107 million Swiss francs ($119 million). A deal would create a $66 billion global asset manager and draw a line under a tumultuous period for GAM that began five years ago and involved the shuttering of nine funds and the dismissal of star bond trader Tim Haywood.
GAM’s variable compensation totaled 38 million francs in 2021, accounting for about a quarter of the firm’s annual personnel costs for the year. The firm has cut its headcount to 541 employees from 701 at the end of 2020.
The company’s income fell 27% in 2022 from a year earlier, according to an investor presentation. In January, GAM had said it would post its fifth straight loss and pushed back the publication of its 2022 results.
(Adds previous variable compensation figures in sixth paragraph.)
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