Bridgewater to Give Employees More Control as Dalio Steps Back
Ray Dalio’s Bridgewater Associates is planning to change its partnership to give more employees ownership.
(Bloomberg) -- Ray Dalio’s Bridgewater Associates is planning to change its partnership to give more employees ownership as the firm moves toward the next phase of its decade-long succession plan.
Dalio discussed the changes, which were announced Thursday to employees and earlier reported by the New York Times, in an interview with Bloomberg Television. The new structure will give more employees say in the governance and management of the firm, and will provide them a greater economic stake in the business, Dalio said.
“It seemed like a natural evolution,” Dalio said. “We’re going to something that needs broader and more formalized partnership.”
The move comes as the 68-year-old Dalio is more than midway through a 10-year succession plan that’s had some false starts. The billionaire, who plans to relinquish his co-chairman title within the next four years, has had trouble getting the right leadership team in place since the transition officially began in 2010.
Together with co-chief investment officers Bob Prince and Greg Jensen, Dalio chose six seed partners and 50 other partners, he said. The two classes will work together to establish the functions, members and responsibilities of the new partnership, according to a person with knowledge of the matter. The employee partners will elect three members to Bridgewater’s board of directors, said the person.
“They will have board representation because they’re the owners,” Dalio said in the interview. Several of the partners already have equity in the firm, “but will continue to have more equity.”
“We will never, never never be a public company,” he added.
The first step in Dalio’s exit strategy was selling stakes in Bridgewater. He once owned the entire company. He now has less than half and has said that he plans to reduce his share to between 10 percent and 20 percent.
As of last year, the rest of the Westport, Connecticut-based firm was controlled mostly by about 200 employees. Jensen and Prince own more than most. Institutions including Teacher Retirement System of Texas, Ontario Municipal Employees Retirement System, and Singapore’s sovereign wealth fund own minority stakes.
Even with the partnership changes announced Thursday, Dalio has left nothing to chance. Bloomberg reported last year that Dalio instructed a team to create a company charter that would turn his Principles -- about 200 rules of the road -- into the firm’s law.
Setting them in stone guarantees that everything from who sets compensation to how the Principles can be changed is governed by a strict system. The charter outlines how people’s votes are weighted and what benchmarks are used to measure investments, among other details. It will even clarify which disputes get escalated to the management committee.
In Thursday’s interview, Dalio also weighed in on the economy. He said he expects 10-year Treasury yields to peak between 3.5 percent and 4 percent. He said three things will determine future world trends: whether capitalism gets reformed so that it works for the majority of the people, the relationship between the U.S. and China and how artificial intelligence and big data is handled.
--With assistance from Saijel Kishan and Katherine Burton.
To contact the reporters on this story: Katia Porzecanski in New York at kporzecansk1@bloomberg.net;Erik Schatzker in New York at eschatzker@bloomberg.net
To contact the editors responsible for this story: Margaret Collins at mcollins45@bloomberg.net, Vincent Bielski, Josh Friedman
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