William H. Gross and Pacific Investment Management Co. agreed to settle claims Mr. Gross was wrongfully driven out as the firm's chief investment officer by executives seeking financial gain, said a joint statement from Mr. Gross and PIMCO on Monday.
The lawsuit, filed by Mr. Gross in California state court in Santa Ana in 2015, alleged that “a cabal” of PIMCO's managing directors “driven by a lust for power, greed and a desire to improve their own financial position and reputation at the expense of investors and decency ... plotted to drive founder Bill Gross out of PIMCO in order to take, without compensation, Mr. Gross' percentage ownership in the profitability of PIMCO.”
Mr. Gross was set to receive a roughly $250 million bonus for 2014, with the majority of that due in the third and fourth quarters. Because he left the firm five days short of the end of the third quarter to join Janus Capital Group, PIMCO refused to pay him the proportionate amount, despite that being their custom for partially completed quarters, the lawsuit claimed.
PIMCO agreed to pay $81 million to settle Mr. Gross' claim, which will be donated to the billionaire's family foundation, according to a person with knowledge of the matter, who asked not to be named because the case was settled privately. Mr. Gross will partially match the settlement to bring the total charitable contribution to $100 million, the person said.
“PIMCO has always been family to me, and, like any family, sometimes there are disagreements. I'm glad that we have had the opportunity to work through those, and see the PIMCO founders receiving the recognition they deserve,” Mr. Gross said in Monday's statement. “I am honored to be included in their ranks and to know that PIMCO is in capable hands."
Dan Ivascyn, PIMCO's group chief investment officer added: "Bill Gross has always been larger-than-life. He has a well-deserved stellar reputation as an investor and a philanthropist. Bill has had an enormous influence on PIMCO and the careers of many who have passed through its halls. He built this business from the ground up and we have great respect and admiration for his talents."
PIMCO also announced Monday that would be dedicating a new “founders room” in honor of Mr. Gross and the firm's other founders at its Newport Beach, Calif., headquarters, and that the PIMCO Foundation would be naming Mr. Gross a “director emeritus” and establishing an annual “Bill Gross Award” in recognition of his charitable endeavors.
Bloomberg contributed to this story.
