Quantcast
The MFWire
Manage Email Alerts | Sponsorships | About MFWire | Who We Are

Subscribe to MFWire.com's News Alerts [click]

Rating:Vanguard Commentator Weighs In on Fund Payouts Not Rated 0.0 Email Routing List Email & Route  Print Print
Monday, June 15, 2009

Vanguard Commentator Weighs In on Fund Payouts

by: Kimberly Chin

Daniel P. Wiener, a Vanguard commentator, gave his insights on the company's 500 Index fund and Partnership Plan fund.

The Partnership Plan's dividend fell from $101.60 in 2007 to $91.56 by 2008, Vanguard reported last week. That's a 9.9 percent difference, Wiener calculated. Meanwhile the Index Fund took a drop of 37 percent.

The funds' dismal performance has also shuffled the "rank-and-file" and caused some top execs to lose their pay. Wiener said that the news means that Vanguard investors will wind up with a 22.6 percent loss.


Vanguard Pay

Partnership Still Beats Indexing

Partnership has its privileges, and never more so than in 2008.

The 2008 bear market certainly took the wind from the Vanguard Partnership Plan’s sails. I an announcement to the Vanguard “crew” last week, Vanguard announced that the 2008 Partnership’s dividend fell to $91.56 from the $101.60 paid out for 2007.

Still, the 9.9% decline in the amount being paid to top executives as well as the rank-and-file was nothing compared to the 37.0% decline for its flagship 500 Index or the 22.6% loss suffered by the average Vanguard investor. I estimate Chairman Jack Brennan’s payday for 2008 still came to something north of $7 million. And if by any chance founder Jack Bogle still holds his shares in the Partnership Plan, his payout would have amounted to a nifty $11 million.

The 2008 dividend drop was only the second decline in the Partnership Plan’s payout since its creation by Jack Bogle in 1984. The Partnership saw a 5.0% decline in 2002; again after a raging bear market ravaged shareholder accounts. Over the past 25 years the dividend has compounded at a 14.7% rate, which is a heck of a lot better than the 9.7% annualized gain for 500 Index. As I’ve often said in the past, it’s a heck of a lot better to work for Vanguard than to invest in its flagship index fund.

Although most Vanguard employees, or “crew members” are capped out in terms of the size of their annual bonus (30% of base compensation for older employees and reportedly just 10% for newer employees, hardly a bonanza given the parsimonious pay Vanguard is famous for), top executives earn the bulk of their compensation from the Plan’s dividends. That’s not surprising, given that founder Jack Bogle’s stated intention when he conceived of the Partnership Plan was “providing incentives to senior management employees who have principal responsibility for the long-term growth and success of the Company.”

Under the Plan’s guidelines, bonuses are paid out in November in fifths. So, employees must remain with the company for five years to receive the entirety of the 2008 $91.56 dividend that was just announced.

As should be obvious given the numbers involved, Vanguard is far from a “non-profit.” In fact, for senior managers, having their compensation tied in large measure to the Partnership Plan has been very, very profitable. For the bulk of employees, however, the Partnership Plan’s payments reportedly simply bring total compensation up to reasonable, but certainly not wealth-producing levels. 

Stay ahead of the news ... Sign up for our email alerts now
CLICK HERE

0.0
 Do You Recommend This Story?



GO TO: MFWire
Return to Top
 News Archives
2024: Q2Q1
2023: Q4Q3Q2Q1
2022: Q4Q3Q2Q1
2021: Q4Q3Q2Q1
2020: Q4Q3Q2Q1
2019: Q4Q3Q2Q1
2018: Q4Q3Q2Q1
2017: Q4Q3Q2Q1
2016: Q4Q3Q2Q1
2015: Q4Q3Q2Q1
2014: Q4Q3Q2Q1
2013: Q4Q3Q2Q1
2012: Q4Q3Q2Q1
2011: Q4Q3Q2Q1
2010: Q4Q3Q2Q1
2009: Q4Q3Q2Q1
2008: Q4Q3Q2Q1
2007: Q4Q3Q2Q1
2006: Q4Q3Q2Q1
2005: Q4Q3Q2Q1
2004: Q4Q3Q2Q1
2003: Q4Q3Q2Q1
2002: Q4Q3Q2Q1
 Subscribe via RSS:
Raw XML
Add to My Yahoo!
follow us in feedly




©All rights reserved to InvestmentWires, Inc. 1997-2024
14 Wall Street | 20th Floor | New York, NY 10005 | P: 212-331-8968 | F: 212-331-8998
Privacy Policy :: Terms of Use