Newspaper article THE JOURNAL RECORD

Fidelity to Offer New Stock in Bid to Stem Senior Employee Turnover

Newspaper article THE JOURNAL RECORD

Fidelity to Offer New Stock in Bid to Stem Senior Employee Turnover

Article excerpt

BOSTON -- Fidelity Investments plans to issue a new class of preferred stock to senior employees in part to stem turnover that's occurred in the company's portfolio manager ranks over the past year. The stock would be awarded or sold periodically to "attract, retain, compensate and motivate" employees, wrote Robert Pozen, Fidelity's general counsel, in a Jan. 24 letter submitted to the Securities and Exchange Commission.

The disclosure of Fidelity's plan comes three weeks after the No. 1 U.S. mutual fund group said it's reviewing the way it compensates fund managers to make sure the company is paying competitive rates. More than 15 portfolio managers left Boston-based Fidelity since the start of 1996, including senior managers Jeff Vinik, Larry Greenberg, Brian Posner and Michael Gray. The issuance of the new stock would be "an attempt to create an incentive for people to stay with Fidelity rather than switch to other fund organizations," said David O'Leary, president of Alpha Equity Research Inc., a brokerage and research firm in Portsmouth, N.H. "I'll be surprised if it works because managers still have to run these jumbo, multi-billion funds and that's no fun." Some of Fidelity's senior executives already own equity in the closely held company. The new class of preferred stock may be available to more than 500 employees, the company said in its letter to the SEC. The new stock won't be transferable and won't trade publicly, according to the letter. Fidelity had more than 22,000 employees at the end of September. This is at least the second time in the past two years that Fidelity would make its equity available to a broader group of employees. …

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