Newport Beach-based bond fund manager Pacific Investment Management Co. has seen its two key executives re-up their contracts for another two years.
Bill Gross, Pimco’s cofounder, managing director and chief investment officer, and cofounder and Chief Executive William Thompson start new, two-year deals this month with parent company Allianz Global Investors AG of Germany.
Details of the contracts weren’t disclosed.
Gross, the world-renowned bond fund manager, is believed to be one of the highest paid executives in Orange County.
When Allianz paid $3.3 billion for a majority of Pimco in 2000, it signed Gross to a five-year contract worth $200 million in salary and bonuses. Gross also made an estimated $400 million selling his Pimco stake to Allianz.
Two years ago, Gross and Thompson signed on for another two years. Terms of that pact weren’t disclosed.
Both renewals were preceded by speculation in financial circles about how long Gross and Thompson plan to stay on at Pimco. Gross is 63. Thompson is 61. Both declined to talk for this story.
Last summer, Crain Communications Inc.’s Investment News publication broached the succession issue in a story about the executives’ contracts.
“Neither of us have any plans to step down,” Thompson said at the time, referring to himself and Gross.
The story referred to an anonymous memo said to have been written by a Pimco employee and sent to consultants, clients and the media. It said succession plans are “never discussed” at Pimco, according to Investment News.
“We talk about (succession planning),” Thompson told Investment News. “At Pimco, this is not a secret or a dirty word.”
A special selection committee made up of Pimco’s managing directors is ready to name successors for Thompson and Gross should they be needed, Thompson said.
How much of an issue succession is for Pimco is unclear.
At Newport Beach life insurer Pacific Life Insurance Co., which spawned Pimco, longtime leader Thomas Sutton retired at 64 this year, in accordance with company policy.
But at another of Pimco’s Newport Center neighbors, The Irvine Company, Chairman Donald Bren turns 75 this month with no near-term plans to step aside.
Much of the speculation at Pimco stems from the prominence of Gross and Thompson.
Gross is credited with the firm’s bond trading success and is widely seen as one of the most influential bond strategists in the world.
Thompson chairs key Pimco committees and sits on boards and committees of Allianz. He’s crafted Pimco’s strategy to go after deregulating European and Asian markets.
Investment News outlined some Pimco veterans who could move up the ranks:
– Christopher Dialynas, managing director and senior member of Pimco’s investment strategy group. He’s been with the company since 1980.
– William Powers, managing director and senior member of Pimco’s portfolio management and investment strategy groups. With Pimco since 1991, Powers previously worked with Salomon Brothers and Bear Stearns Cos. specializing in mortgage-backed securities.
– Mark Kiesel, executive vice president and senior member of Pimco’s portfolio management and investment groups. With Pimco since 1996, Kiesel earlier was with Merrill Lynch & Co. and JP Morgan & Co.
– Paul McCulley, managing director and generalist portfolio manager. With Pimco since 1999, McCulley could be the company’s most prominent executive after Gross and Thompson. He served as chief economist for the Americas for UBS Warburg.
Also of note: Mohammed El-Erian, a former emerging markets portfolio manager for Pimco who left last year to head up Harvard Management Co., the investment arm of Harvard University’s endowment fund.
