The compensation committee of Franklin Resources voted Jan. 1 to increase the salaries of its five top executives by 7% for calendar year 1998. The executives, each of whom makes more than $500,000, took pay cuts of $25,000 Nov. 1.
According to federal filings, the salaries of other employees of the company worldwide were not increased. In fact, earlier this month, more than 700 people were laid off because of restructuring. Franklin's stock price declined 26% in calendar year 1998.
Cash bonuses for the top five executives were the same as last year; they received no stock bonus. Reduced stock awards and cash bonuses were given to certain other executives.
According to the federal filings, for the fiscal year ended Sept. 30, Charles B. Johnson, president and CEO, received a $460,000 bonus; his salary was up 6% from last year to $609,832. Rupert Johnson and Harmon Burns, executive vice presidents, received bonuses of $460,000 and salaries of $557,072, up about 8% from 1997. The two senior vice presidents, Martin Flanagan and Charles E. Johnson, received $552,000 bonuses and salaries of $803,253, an 8% increase.
Startups outpace M&As
Investment management startups will continue to exceed the number of acquisitions in 1999, according to the annual commentary released by Cambridge International Partners.
Relationships between money managers and distributors probably will remain diverse in 1999, said John H. Temple, Cambridge principal. "We expect the distribution sector, being scale driven, to continue to consolidate," he said. Managers whose success is not dependent on scale are more likely to proliferate.
The number of independent asset management firms with $500 million to $10 billion under management has increased more than 50% in the last five years, the study states, while the number of independent managers with more than $10 billion under management continues to dwindle.
Milwaukee boots exec
Kathy A. Stover was terminated this month as executive director of the $3.8 billion Milwaukee Employes' Retirement System.
Ms. Stover joined the fund last February. Her termination came just before the end of a one-year probationary period. She said she plans to sue the city, but declined to specify on what grounds.
Grant Langley, Milwaukee's city attorney, said as a probationary employee, Ms. Stover has few rights and doesn't need to be given a reason for her dismissal.
CalSTRS OKs program
The $90 billion California State Teachers' Retirement System approved a cash equitization program, which will substitute an S&P 500 index return for a cash return through investment in S&P 500 futures contracts, Standard and Poor's depository trust receipts and short-term fixed-income securities.
The program is expected to ease the fund's investment of active domestic equity managers' cash balances; eliminate lower returns resulting from cash flows in CalSTRS' S&P 500 index portfolios; and equitize cash resulting from transitions among domestic equity managers.
CalSTRS staff will make the investments. CIO Pat Mitchell will have authority to trade up to $500 million daily for the program, and lower level officials will be able to trade between $10 million and $50 million daily.
Banks gain share
Banks are beginning to displace securities dealers as the primary vendor used by corporate treasurers for short-term investment products, according to a new study by Treasury Strategies.
London trust hires 3
PPP Healthcare Medical Trust, has split L320 million ($528 million) evenly among three managers.
Britannia Asset Management and Fidelity Pensions Management were picked to run actively managed global balanced briefs, while Barclays Global Investors was picked to run a passively managed U.K. equities mandate for the newly created trust. The trust's board will meet next month to allocate an additional L100 million among the three managers. Watson Wyatt assisted.
Pioneer named subadviser
Pioneer Investment Management has been hired as exclusive subadviser for the new large-cap growth and large-cap growth balanced strategies of Sierra Investment Partners, a $1.3 billion manager of managers.
NADA sets review
Officials at the $3.4 billion National Automotive Dealers and Associates Retirement Trusts intend to begin reviewing the manager lineup shortly "and see where we can make any improvement," said Cynthia A. Hargadon, director of investments.
The trust has three funds: NADART, a defined contribution plan containing a commingled pool with separately managed accounts; the income fund, which invests in short-term fixed-income investments; and the Choice plan, a 401(k)-type fund, which offers nine investment options.
Houston taps Scudder
The $1.4 billion Houston Firefighters' Relief & Retirement Fund hired Scudder Kemper as its first emerging markets manager to run $40 million funded from cash, said Danny J. Bowers Jr., CIO.
The hiring was the result of an asset allocation study. The new asset mix cuts domestic equity to 31% from 40%; raises international equities slightly, to 16% from 15%; boosts domestic fixed income to 22% from 18%; and puts alternatives at 15% from 11%. High-yield bonds remain at 13%, and cash at 3%.
Wichita sets review
The Wichita (Kan.) Retirement Funds will form a special investment committee next month to review managers while consolidating the $419 million Employees' and the $343 million Police & Firemen's funds defined benefit plans, said Alan Person, pension manager. Mr. Person said the consolidation will reduce manager and custodian fees; it should be complete by next January. Callan Associates is assisting.
Kilcollin resigns
T. Eric Kilcollin resigned as president and chief executive of the Chicago Mercantile Exchange, effective in March. A search committee will be formed to find his replacement.
Appeal denied in ADM case
The Supreme Court last week upheld a lower court's decision to reject a lawsuit brought by CalPERS and the Florida State Board of Administration against Archer Daniels Midland.
The funds had sought to recover damages for shareholders resulting from illegal behavior by ADM.
The court voted 4-4 on the appeal, and the split vote -- Justice Sandra Day O'Connor did not participate -- lets stand the lower court ruling.
CalPERS and Florida, two of ADM's largest shareholders, filed an objection to an $8 million settlement (all of which went for attorneys' fees) of shareholder suits resulting from ADM's guilty plea in 1996 to violating federal antitrust laws.
Marketer dies
Katherine Scanlon Adams, 45, vice president of marketing at Lyster & Watson, died Jan. 20 from brain cancer.
Prior to joining Lyster & Watson, she had served as a vice president of marketing at Bankers Trust, BEA Associates and Pareto Partners.
Donations may be made to Memorial Sloane Kettering's Cancer Center Memorial Fund ID #4170502 for melanoma research.
