£63m pay deal of boss who blocked savers from accessing own money
‘Accruing such vast wealth’
THE fund chief who has frozen customers out of their savings has pocketed a £63million pay bonanza.
Neil Woodford and business partner Craig Newman have shared £100million between them over the past four years.
Yet investors, who have seen dismal returns of just 0.36 per cent over this time, have been banned from making withdrawals.
They had been scrambling to reclaim their cash after the value of his flagship fund tumbled following a series of bad bets.
Mr Woodford, 59, said he had to suspend withdrawals to give him time to restructure the fund.
But Luke Hildyard of the High Pay Centre said: ‘People will be outraged that a fund with such well- documented troubles could prove quite so lucrative for its owners, while those who have invested money in it, often on behalf of ordinary pension savers, lose out. Cases like this are terribly bad for the reputation of business and capitalism.
‘Broader questions should be asked about governance and incentives – when investment managers and business leaders can accrue such vast wealth for unimpressive performance, there isn’t much spur for them to a better job.’
Mr Woodford was once one of Britain’s most celebrated stock pickers and his funds have for years been recommended to savers as a way to grow their nest eggs.
He spent 25 years at American giant Invesco but in 2014 set up shop with his own fund, prompting many faithful investors to follow him with their money.
The Exeter University graduate does not take a salary but instead takes payment in shared profits and dividends. He and business partner Mr Newman, 48, have a 65 per cent and 35 per cent stake respectively.
In 2015 and 2016 they shared £47.5million in profits from Woodford Asset Management, according to Companies House. And in 2017 and 2018 the pair received dividends worth £ 49.2million overall from Woodford Investment Management.
It is understood that some of the cash will be used to pay their wages, with the rest reinvested or given to charity.
However, the huge payouts come after lacklustre performance from Mr Woodford’s flagship fund.
Since it started in 2014, Woodford Equity Income has delivered savers only a 0.36 per cent return compared with a 29.2 per cent market average.
Performance over the past three years has been woeful, costing savers 17.5 per cent of their stake as a number of investment made by Mr Woodford have tanked.
After hitting a peak of £10.2billion two years ago, the fund’s size dropped to £3.77billion last month as investors made for the exit.
On Monday Mr Woodford froze all cash withdrawals from Woodford Equity Income to prevent further outflows. This stops savers accessing their cash for at least 28 days.
He is thought to have taken the drastic measure after Kent County Council told him it wished to withdraw funds invested on behalf of pensioners.
The authority, which put £50million in Icelandic banks that collapsed in the financial crisis, has a stake worth a reported £250million.
A spokesman for Mr Woodford and Mr Newman declined to comment.