The board of directors and the chief executive of Gam will not receive any additional compensation for 2019 as the troubled fund house looks to save £63m in a strategy overhaul.
In its full year results, published to this morning (February 20), the asset manager announced its management board would not receive a bonus for 2019 while its chief executive, Peter Sanderson, had ditched his fixed cash award.
Gam stated: “No variable compensation will be paid to the [board], which demonstrates its accountability and further follows Gam’s key principle in linking compensation to the group’s overall performance.
“Group chief executive Peter Sanderson was eligible for a £200,000 one-off fixed cash award...in recognition of the financial performance of the group…[he] requested to forego this award.”
The news came as the company announced an overhauled strategy to “make Gam fit for the future” over the next two years.
Gam plans to make costs savings of £63m by 2022, improve transparency and grow organically by building on its "core strengths" to drive sustainable inflows and build an underlying pre-tax profit of nearly £80m.
Mr Sanderson said: “The strategy we are outlining today will build long-term shareholder value by complementing this strong investment performance with a more efficient ‘One Gam’ approach, taking full advantage of technology to deliver for our clients.
“We will become more transparent and have set clear targets against which we will be measured. There are clear avenues to growth by building on our core strengths in client service and differentiated products.”
Gam’s plan for the future is a bid to move on from its troubled past few years, in which the suspension of one of its key fund managers led to a sustained period of outflows and saw the fund house’s assets under management dwindle.
In 2018 Gam liquidated a range of nine bond funds run by Tim Haywood after he was suspended amid concerns about due diligence and record keeping on the funds.
By October that year, the company's AUM had dropped by more than 10 per cent and it had seen £4bn of outflows from its fund range.
Today’s results showed outflows had continued from every asset class during 2019, reaching £8.8bn. Gam's assets under management dropped from £44bn to £38bn during the year.
It’s underlying profits before tax dropped from £100m in 2018 to just £8.2m while its operating margin tanked from 25 per cent to 4 per cent over the same time period.
Gam said it expected the market to remain volatile throughout 2020 and investors to remain cautious, but said the fundhouse was “well positioned” to achieve its long term goals and to grow.
It added: “As we enter 2020, we are seeing stabilisation of net flows with broad-based demand.
“Gam is fully focused on implementing its new strategy, which is based on efficiency, transparency and growth to achieve its new financial targets and thus make it fit for the future.”