GAM CEO Scraps Dividend, Executive Bonuses in Sweeping Overhaul

(Bloomberg) -- GAM Holding AG Chief Executive Officer Peter Sanderson scrapped the dividend for 2019 and said top executives also won’t receive bonuses as he embarks on a major three-year overhaul.

The group management board will receive no bonuses for 2019 and Sanderson asked to forgo a fixed cash award due to him this year. The executive is targeting total savings in excess of 80 million Swiss francs ($81 million) as he seeks to make the asset manager more transparent and efficient.

Sanderson, a former Blackrock Inc. executive who took over last year, is trying to steady the firm after it was sent into a tailspin by the suspension of star trader Tim Haywood in July 2018. He has signaled that talks on layoffs will begin imminently and he hired Steve Rafferty, also from Blackrock, as chief operating officer to disentangle back-office systems.

Under the new plan GAM plans to buy back 16 million shares -- worth just under 50 million francs at Wednesday’s closing price -- over three years.

The Swiss firm reported a smaller-than-expected decline in key assets in the final quarter of last year, according to an early earnings release. That was received well by investors, signaling that the outflows that started with Haywood’s suspension may be nearing an end.

Since the scandal broke, GAM has lost more than 40% of assets in its investment management business. Haywood’s funds, which were among the firm’s biggest, were liquidated and the manager was dismissed last year for gross misconduct.

Still, the asset manager’s stock is currently trading at a fraction of the value two years ago. GAM on Thursday reported a net loss of 3.5 million Swiss francs for the full year, after a loss of 929 million francs in 2018 that was triggered by a writedown.

The firm’s investment management unit oversaw 48.4 billion francs at the end of December, down from 56 billion francs at the beginning of 2019. The private labeling business, which is generally less profitable, had assets of about 84.3 billion francs.

To contact the reporter on this story: Patrick Winters in Zurich at pwinters3@bloomberg.net

To contact the editors responsible for this story: Dale Crofts at dcrofts@bloomberg.net, Ross Larsen, Vernon Wessels

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