PIMCO Says Thanks With Alaska Cruise
By RAJIV VYAS
Talk about a perk.
Newport Beach-based Pacific Invest-ment Management Co. has invited workers and their significant others on a 12-day, company-paid Alaskan cruise.
The time is set to be counted as paid vacation, though for most it won’t be taken out of what they have on the books at PIMCO. There’s also a payment to help offset the tax implications of the trip. Workers will have to come up with their own petty cash and get themselves to San Francisco, where Crystal Cruises Inc.’s six-star luxury line, Crystal Harmony, raises anchor.
Bill Gross, managing director and PIMCO’s chief investment officer, came up with the “Alaska Invitation” idea, as PIMCO refers to it.
“This is his event,” said Ernest Schmider, a PIMCO managing director.
The trip comes at a time when PIMCO is setting records for performance and assets under management. So why not reward workers, the company says, with a free lunch,or, in PIMCO’s case, an Alaskan cruise.
Last year, PIMCO’s Emerging Market Bond Fund was the top bond fund in the country, returning 28% after fees.
And PIMCO’s Total Return Fund, managed by Gross, was the top selling mutual fund,stock or bond,in the U.S. last year. The fund’s assets under management grew 29% to $49 billion at year’s end, and were $54.5 billion last week. It’s the world’s largest bond mutual fund.
Total Return and Emerging Market funds aren’t the only funds at PIMCO that have shown growth. Since 1999, PIMCO’s assets under management have grown from $181 billion to more than $250 billion last week.
“A lot of people have worked hard to make it happen,some of them get noticed all the time and some of them don’t get noticed,” Schmider said. “I think (Gross) felt like this was the way for him and the rest of the company to just take a pause and show some appreciation for the collective effort.”
Who’s going to mind the ship at home while PIMCO’s bond managers and support staff sail to Alaska?
“We obviously don’t want everybody out of the office all at once,” Schmider said, a thought that PIMCO investors likely share.
So the bond giant has organized two schedules for the Alaska Invitation. The first cruise is set to leave on June 26, 2003, returning 12 days later. PIMCO has booked all 950 spaces on the boat for that cruise. The second trip leaves July 20.
“We want to be sure that all the business functions are covered,” Schmider said.
Most of the organizing and legwork for the trip has fallen to Gross’ assistant, Danelle Reimer.
The cruise alone could cost about $6 million: $5,000 per person, according to PIMCO, multiplied by about 600 employees plus another 600 spouses and guests.
But that’s not all. Not wanting to burden workers with paying full tax on the amount of the trip, PIMCO will reimburse the Internal Revenue Service bite. That could be about $2 million.
And most workers won’t have to count the 12-day trip as vacation time. Workers with two weeks of vacation won’t have to count the vacation at all, while those with three weeks to five weeks will lose five days.
Managing directors will have the trip counted against vacation.
When all is said and done, the trip could top out at around $15 million including vacation pay. In the annals of corporate generosity, the move falls somewhere between the lavish company parties of the technology boom and 1996’s doling out of $100 million in bonuses by Fountain Valley-based Kingston Technology Co.
Gross, who has traveled on the Alaskan cruise several times before, and PIMCO Chief Executive William Thompson, are set to join others on the trip.
PIMCO sent a memo to its workers in April telling them about the Alaska Invitation.
“There will be no PIMCO business conducted on this cruise, except for those poor souls who bring along their cell phone,” the memo said.
The invitation is extended to those working as of April 9 and who are still staff members at the time of the cruise. Those who join the company after April 9 will be eligible for the trip, but only if there is enough space on the ship.
“We don’t know how many will actually accept,” Schmider said. “We hope most people or all people will.”
Planning the trip presents an unusual challenge.
“We are not accustomed to cruise planning,” Schmider joked. “It is not our core competency.”
