The founder of US bond specialist PIMCO, Bill Gross, is suing the company and its owner Allianz Asset Management of America for $200m (€176m) of bonus payments he alleges he was due, after colleagues ousted him from the firm.
In a colourfully worded complaint filed in the California Superior Court in Orange County, Gross’s lawyers express his opposition to the “high-risk, high-fees” approach that had gained ground at PIMCO.
The complaint – for constructive termination, breach of contract and breach of covenant of good faith and fair dealing – says Gross was well-known as an advocate for PIMCO’s investors.
“He championed reasonable fees for PIMCO’s services and was vocally sceptical inside the firm of a select group of the younger executives’ desire to transform PIMCO into a high-risk, high-fee asset-management company that invested in riskier equities and leveraged real estate investments, as opposed to the stable bonds that built the firm’s reputation,” the complaint said in its introductory paragraphs.
According to the complaint, for which a jury trial is being demanded, as long as Gross remained at the company, these younger executives could not transform PIMCO, increasing client risk and their own compensation.
Because of this, Gross alleges he was targeted in a power struggle within the company that would eventually lead to his “wrongful and illegal ouster” from the company he founded.
PIMCO, according to the complaint, “wrongly and illegally” denied Gross hundreds of millions of dollars in earned compensation.
In the complaint, lawyers detail the huge bonus pool amassed at PIMCO to be divided among its managing directors.
In 2013, for example, the profit-sharing bonus pool totalled $1.3bn, with Gross – who was entitled to receive 20% of it – given $300m from the bonus pool that year.
The $200m he is suing for is equal to the bonus sum he alleges he was due in 2014 but not given because of the precise date of his departure.