Mutual Fund Chief Compliance Officer Compensation · CCO Total Compensation (AUM > $75bn) CCO Total...

Mutual Fund

Chief Compliance Officer

Compensation

THE 2015 MPI ANNUAL SURVEY

November 3, 2015

(First released June 25, 2015)

Today’s Speakers

Susan Wyderko

President & CEO,

Mutual Fund

Directors Forum

(Moderator)

Meyrick Payne

Sr. Partner,

Management

Practice

Jay Keeshan

Partner,

Management

Practice

2

Agenda

•Introduction/Survey Methodology

•Participant Details

•Executive Summary/Trends/Highlights

•CCO Compensation/Structure

•Other Benefits

•Organizational Practices

3

Survey Methodology

• 10th Annual Survey- Since 2006

•Data collection in spring, delivered in June

•Mailed/emailed to database, distributed at ICI

conference

•Full confidentiality assured

•60 participants in 2015

•Representative sample

4

Participant Details

Participating CCOs represented a total of $2.8 trillion in assets under

management. All regions of the U.S. were represented in the survey.

Boston 8%

New York 15%

Northeast *

12%

Northwest

4%

Southeast

4%

Midwest

31%West

20%

Southwest

6%

* excluding Boston/NYC

5

Participant Details

100% of participants are CCOs who are employed full time. 59% serve as

CCO to both the funds and the advisor. The average age was 48.

6

Respondents had the

following qualifications:

15% were CPAs

45% were lawyers

20% have MBAs

66% had some form of

securities licensing –

most common were the

Series 6, 7, 24, 26, 27,

63, and 65

18% have SEC/other

regulatory experience

Complex assets were

represented as follows:

< $4 Billion

$4 Billion -- $15 Billion

$75 Billion+

$15 Billion -- $75 Billion

24%

17%

27%

32%

Participant Details

Independent contractors and “fund only” CCOs were in the minority; the

majority of CCOs were full-time, salaried employees and performed

duties for advisors as well as the funds.

3% 97%

Independent Contractors

Salaried Employees

41%

59%

Fund Only

Fund & Advisor

7

Survey Summary / Trends

After holding relatively flat through the financial crisis, many CCOs have now

seen steady increases over the past few years. In this year’s study the 60

participants received average total compensation of $389,402, versus

$361,110 last year, a gain of 7.8%.

A subset of the survey participants, which includes 31 participant CCOs for

whom data exists for two years (2013 and 2014), saw an increase in total

compensation of 13.1% over the previous year.

Bonuses for CCOs typically range from 25% to 100% percent of base pay.

While some of the highest-paid CCOs received as much as 200% or more

before the market meltdown, that number has been decreasing and in 2014 the

average bonus for large-fund CCOs was 59% of their base pay.

8

Total Compensation

9

Range of Compensation

The range of CCO compensation for the reporting fund families

was very wide and depended on many variables.

Geographic location, number of funds and portfolios, retail or

institutional distribution, number of sub-advisers, and mix of insurance

related products were among the numerous variables affecting pay

levels.

Many CCOs had been long term employees of the management

company, or had had many years of experience at another fund

company.

As a result, CCO compensation is often correlated with age or length of

experience.

10

SEC CommentsChief of Staff Buddy Donohue recently provided his top 9 considerations

for CCOs in a speech at a compliance conference in San Diego.

1. Laws, Regulations and other Requirements

2. Organization and Operations of the Firm

3. Conflicts of Interest

4. Clients of the Firm

5. Compliance and Other Systems

6. Policies and Procedures

7. Markets and Business Practices

8. Culture of the Firm

9. What DON’T I Know?

11

Bonus as a Factor

in Total Compensation

While base salaries are relatively stable, bonuses are a significant factor in total

compensation. The proportion of bonus as a percentage of total pay often

grows with the size of the complex. CCOs at the largest complexes—$75

billion and above—received higher percentage bonuses, typically about 50% to

100% of base pay.

$0

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

$0 to $4bn $4bn to $15bn $15bn-$75bn Above $75bn

Average CCO Compensation - 2014

Bonus

Base

12

CCO Total Compensation:

Assets up to $4 Billion

The average for this group was

$300,032 with a range of $179,634

to $420,429 within one standard

deviation.

The full range was from roughly

$140,000 to $550,000.

Bonuses for this group averaged

approximately 38% of base pay

and 26% of total pay.$0

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

$700,000

$800,000

CCO Total Compensation(AUM < $4bn)

13

$0

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

$700,000

$800,000

CCO Total Compensation(AUM $4bn - $15bn)


Assets $4 Billion to $15 Billion


$314,533 with a range of $202,174


deviation.


$170,000 to $630,000.



and 24% of total pay.

14

$0

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

$700,000

$800,000

$900,000

CCO Total Compensation(AUM $15bn - $75bn)


Assets $15 Billion to $75 Billion


$506,946 with a range of $297,999


deviation.


$165,000 to $925,000.



and 30% of total pay.

15

$0

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

$700,000

$800,000

$900,000

$1,000,000

CCO Total Compensation(AUM > $75bn)


Assets $75 Billion +


$570,800 with a range of $379,950


deviation.


$300,000 to $900,000.


approximately 59% of base pay and

30% of total pay.

16

Influence on Bonus

The vast majority of full-time CCOs (95%) receive a bonus as a part of

their total compensation. Management companies and increasingly

fund boards each have a strong influence in setting bonuses.

17

17%

89%

66%78%

96%

9%

68% 70% 70%

91%

FundPerformance

CorporatePerformance

CCOWorkplan

BoardDiscretion

ManagementDiscretion

Factors Influencing Bonus for Full Time CCOs

2014

2007

Compensation Comparisons

CCOs with different duties and backgrounds on average receive

varying levels of compensation.

$389,402

$316,958

$437,007 $437,268

$320,696$355,221 $369,703

ParticipantAverage

Fund-onlyCCOs

Advisor &Fund CCOs

Lawyers CPAs NonLawyer/CPA

SEC Exp.

Average Total Compensation

18

Other Benefits

19

Employee Benefits

The CCO position benefits are typical for an officer of his/her salary

grade (Full-time salaried employees).

33%

13%

98%

98%

22%

33%

25%

19%

57%

29%

25%

92%

98%

32%

46%

34%

26%

79%

Restricted Stock

Stock Options

Vacation for Eq. Pay Grade

Current Health Benefits

Retirement Health Benefits

Perqs. For Equiv. Pay Grade

Deferred Comp.

Defined Benefit Pension

Defined Contrib. Plan/401K

2007

2014

20

Organizational Practices

21

Additional Duties

The majority of participant CCOs perform other functions for the funds,

management, or both.

83%

36%

35%

71%

52%

72%

32%

54%

51%

Board Support

Global Responsibilities

Internal Audit

Risk Management Support

Legal Support 2007

2014

22

CCO Internal Reporting

44% of CCOs report internally to the CEO; 22% to their general

counsel.

4%

3%

8%

19%

22%

44%

President

CFO

COO

Advisor/Parent/Global CCO

General Counsel/CLO

CEO

23

Compensation Source

There has been a growing trend toward sharing the cost of the CCO

between the funds and the manager. This year 50% reported some or

all of their compensation being paid by the funds.

50%50%

CCO Compensation Split

Fund Pays All or Part

Advisor Pays 100%

14%

48%10%

28%

Up to 25% 25% to 50%

51% to 75% 75% to 100%

How Much the Funds Contribute

(if they do contribute)

24

Management Practice Inc.216 West Hill Road, Suite 200

Stamford, CT 06902

Phone: (203) 973-0535

www.mpiweb.com

www.mfgovern.com

Jay Keeshan

[email protected]

Meyrick Payne

[email protected]

25

Mutual Fund Chief Compliance Officer Compensation · CCO Total Compensation (AUM > $75bn) CCO Total...

Documents

Transcript of Mutual Fund Chief Compliance Officer Compensation · CCO Total Compensation (AUM > $75bn) CCO Total...