In a Rare Move, Comp Changes for 2020 Announced Early

Alan Johnson, CEO at compensation consultancy Johnson Associates, believes it’s clear that Argo’s corporate governance changes are the direct result of a proxy contest led by Voce Capital…

Shareholders’ concerns over Argo’s pay design were likely due to the fact that its LTIP plan was an outlier. Indeed, Johnson is surprised that Argo didn’t already have a three-year period in place for measuring its long-term metrics.

“That’s pretty standard,” he says. “Their performance goals weren’t hard enough in their long term.”
While Johnson acknowledges it isn’t common for companies to announce corporate governance changes this early on prior to their next fiscal year, in this case, he says, “it’s certainly reasonable,” since Argo might want to avoid another proxy fight in 2020 or signal to shareholders “we are responsible.”
Johnson says these are two small measures from Argo to shareholders to show “we listened, we heard you.” However, he warns that shareholders shouldn’t ignore the other concerns Voce voiced in its proxy fight, because he says, “I can’t imagine in the proxy fight, they were talking to investors and these were the only two things they were told to do.”

Agenda Week / September 12, 2019

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Manning & Napier Seeks to Be Leaner, Focus on Wealth Clients

For institutional investors and consultants assessing the health of money managers, there isn’t necessarily a direct relationship between desired headcount levels and AUM at firms, “especially in today’s market where revenue plays a larger role given the wide range of fee structures for different products,” Francine McKenzie, managing director at compensation consultant Johnson Associates Inc., New York, said in emailed comments.

“I would think AUM might be one factor, but in conjunction with the kind (complexity, associated risk factors, etc.) and number of products,” as some require more staff than others to manage, she added.

Still, a significant drop in AUM and headcount “could signal instability to investors which is obviously undesirable, especially if coupled with poor investment returns,” Ms. McKenzie wrote.

Pensions & Investments / September 2, 2019

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Some Wall Street Workers Face Pay Slump in 2019: Report

…there is a peculiar dynamic, where pay can fall even when the economy is strong, said Alan Johnson…

“This is some kind of an inflection point,” he said. “It used to be, ‘As long as AUM is up and as long as the market is up, you’ll be fine.’ But that’s no longer true.”

Although fewer are bringing home massive paychecks, Wall Street still rewards top performers, Johnson said. Those who create products, maintain strong ties with clients and outsmart rivals are particularly valuable… “There’s a huge focus on paying the very best people.”

Reuters / August 6, 2019

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Wall Street Girds for Less Growth in Pay

Compensation for many employees of big banks and asset managers is expected to stay flat or drop this year…

Equities trading and underwriting will probably be hardest hit, according to a new report by the compensation consultancy Johnson Associates. Their annual pay packages could fall by as much as 15 percent from last year.

The New York Times / August 6, 2019

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Wall Street Bonuses to Take a Hit From This Year’s Trading Slump

Traders and investment bankers “haven’t had the revenues that I think they were expecting,” Alan Johnson, managing director of Johnson Associates, said in an interview. “Clients haven’t come back, the volumes haven’t come back.”

“The economy is clearly slowing, so how fast is that going to happen I think is the big variable,” Johnson said. “Is it going to slow at a nice, even pace or are we going to have a more dramatic decline?”

Bloomberg / August 6, 2019

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Expecting a Raise? Asset Mgmt Staff Set for Pay Disappointment

Asset gains will not push incentive compensation up due to the shift in assets to lower-fee products and the rebalance out of equities into fixed income strategies, the compensation consulting firm states in its second-quarter trends and year-end projections report released today.

Revenues have replaced market gains and assets under management as predictors of incentive compensation, according to Johnson Associates.

“We always looked at simple gauges in the industry: If the market was up 15%, that would be a very attractive pay year,” Johnson says. “[Now], AUM doesn’t mean what it used to. We now realize that a dollar of AUM is not the same as another dollar.”

Fund Fire / August 6, 2019

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