Bill Gross, Pimco said to settle lawsuit over his exit for $81m.
NEW YORK (Reuters) – Bill Gross has reached a roughly $81 million settlement of his lawsuit against Pacific Investment Management Co., ending a bitter two-anda-half-year drama over the well-known bond investor’s abrupt departure from one of the world’s biggest asset managers.
Terms of the accord were not disclosed, but they were confirmed by two people familiar with the matter.
Gross and Pimco said in a joint statement the settlement was “amicable,” and that Pimco will donate the proceeds to charity.
“Pimco has always been family to me, and, like any family, sometimes there are disagreements,” Gross, a Pimco cofounder, said in the statement.
The accord quietly ends an acrimonious battle over the 72-year-old billionaire’s September 2014 exit from Pimco, where he had been chief investment officer. That battle played out first in the media and then in Gross’ $200m. lawsuit.
Gross, who now works for Denver-based Janus Capital Group Inc., left Pimco following negative reports about his leadership and weak returns at Pimco Total Return, once the world’s largest bond mutual fund with $293 billion of assets at its peak.
In his October 2015 lawsuit, Gross accused a greedy “cabal” of Pimco executives, including group chief investment officer Dan Ivascyn, of plotting to oust him so they could divide his 20% share in Pimco’s bonus pool among themselves.
The pool totaled $1.3b. in 2013, and Gross’s pay that year topped $300m., according to the complaint filed in California Superior Court.
Pimco, a Newport Beach, California-based unit of German insurer Allianz SE, countered that Gross’s “egregious misconduct,” including abusive behavior toward colleagues, would have justified his firing had he not resigned.
Once known on Wall Street as the “Bond King,” Gross left Pimco eight months after his second-in-command, Mohamed El-Erian, quit, in part because of Gross’s management style. Gross is worth $2.5b. according to Forbes magazine.
The joint statement reflected Pimco’s recognition of Gross’s role in building the firm into a mutual-fund powerhouse over four decades, with more than $2 trillion of assets under management, even if his last months proved uncomfortable.
“Bill Gross has always been larger than life,” Ivascyn said. “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.”
In the statement, Gross said: “I’ve always been amazed by my success, and grateful for the opportunity to make a difference in the world. I’m glad that can continue.”
Gross has been unable to replicate his Pimco success at Janus. His Global Unconstrained Bond fund has just $1.9b. of assets and been outperformed by 80% of its peers in the last year, according to Morningstar.
Janus said last October it planned to merge with London-based Henderson Group Plc.
Pimco said it will dedicate a “Founders Room” at its headquarters to honor its cofounders, while its Pimco Foundation named Gross a director emeritus and established an annual award in his name.