Pimco’s founder, Bill Gross (70), was retained as the company’s CEO in the fallout – and a messy one at that – of Mohamed El-Erian’s departure. Mr. El-Erian served as the CEO and the co-CIO, and the loss necessitates a strong position of leadership, leading to Mr. Gross’ salary of $200 million. Over the course of more than 40 years, Mr. Gross amassed nearly $2 trillion in assets and a $236 billion return for what is the most actively managed mutual fund in the industry. For some perspective, the average income for the president of a $10 million company is in the range of approximately $100,000 (1% of revenue) with a profit-related bonus. Mr. Gross is going to receive a fraction of that…
Among those who feel that the salary is way too high is the director of the High Pay Centre, a group that lobbies for greater workplace equality. To quote her, she feels “it is impossible” to explain why someone should be paid so much, concluding that it is “obscene” and “cannot be defended when things are going well,” much less when they are less than perfect. Remaining more neutral is Amin Rajan, the CEO of a consulting service, who believes it is up to the board and other leadership to decide whether or not Mr. Gross is worth the salary, but does infer that the star of the past may be fading.What is interesting about the opposant to this news – if you can call it that – is that they all have some kind of agenda. A rival executive said that it’s time for Mr. Gross to retire, which might benefit him and his firm, and others compare the cost of his salary to the hiring of teachers, as though there was any relationship between Pimco and public/private school hiring. There is no doubt a teacher bring more value to the society. It is just a number game. Not ethical, surely.
Lastly, one competing executive – who stated his ageist comments anonymously – heroically noted that Mr. Gross is too old as he is “beyond retirement age.” It would be interesting to know what this particular executive’s clients thought of his comments, given that it’s possible many of them are working in their golden years. The truth is that this salary is obviously excessive given the value Mr. Gross provides. Additionally, in spite of his age, he’s actually among modern CEOs, using Twitter and other social media. In fact, he seems to reflect much of the sentiment that was found in Dr. Robert Pascale’s 2012 book, The Retirement Maze, which noted that many older people are not only in their prime during their “retirement years,” but also, in some cases, more effective in their careers.The reasons for this include the fact that they don’t have to go to work, but want to do something for themselves and others. When it comes to keeping up the company you started, much like Mr. Gross, the motivation to serve is probably here. Noting this, he may have actually taken a page or two from Dr. Pascale who originally retired at the age of 51 only to find that he had so much more to give! What would you advice as the best use of the astronomical compensation?