Ten of Russell Investments' most senior executives have left or will be gone by the end of the year, lured out the door by lucrative terms of the firm's equity ownership program.
The severe market downturn in the second half of the year has suddenly made leaving Tacoma, Wash.-based Russell much more attractive, given that executives who exercise their options and leave before the end of the year will receive a price for their phantom equity shares based on a May 2008 valuation.
Some leaving Russell are nearing normal retirement age, such as Michael Phillips, the firm's longtime chairman; Linda Gutmann, director, risk management; and Hal Strong, vice chairman who had been the firm's chief financial officer and chief operating officer until the spring.
Several other well-known Russell executives will formally retire before the end of the year but will remain available as senior advisers to the firm, including Randy Lert, chief portfolio strategist, and Ernie Ankrim, chief investment strategist. Kelly Haughton retired as director, index strategies in October, but remains a senior adviser.
Younger senior executives who resigned are Thomas Hanly, chief operating officer; James Wallace, chief information technology officer; and David Grieger, managing director, head of Russell Indexes and head of marketing. Ann Watson, chief human resources officer, also has resigned but will remain at Russell until her successor is named, said Jennifer Tice, a Russell spokeswoman.
The equity ownership plan was introduced in 1998 when Northwestern Mutual Life Insurance Co., Milwaukee, acquired Frank Russell Co., Russell Investments' parent (Pensions & Investments, Aug. 24, 1998).
An equity ownership scheme that directly rewarded senior executives for growth in assets probably seemed like a good idea a decade ago when Northwestern Mutual bought Frank Russell for almost $1 billion. At the time, Russell had $21 billion under management; as of Aug. 21, it had $200 billion.