Marc Stern is revamping the way TCW Group compensates many of its employees. In an interview with Pensions & Investments' Randy Diamond, Stern talked about a new incentive plan whereby investment professionals, marketers and administrative staff (175 out of 700 employees) will be eligible for gaining a stake in the company (up to 20 percent total) and a bigger chunk of their fees. Meanwhile, a key team appears to be prepping to spin off in a decade.

"Hopefully, we will make some people wealthy along the way," said Stern, vice chair and CEO of Los Angeles-based TCW. "In relation to equity, the calculation that a firm like SG [Societe Generale, TCW's parent] does is that if we motivate and incentivize our people, we keep the good people."

TCW's moves come in the wake of the December ouster of TCW fixed income bigshot Jeff Gundlach, who then started up his own DoubleLine Capital and drew over a number of his staff, even as TCW sued Gundlach and bought rival MetWest.

TCW employees will receive restricted shares of the firm's stock, convertible over five years of vesting, and sources told P&I that the key energy/infrastructure and small-cap/midcap growth teams will keep more than 50 percent and almost 50 percent of their fees, respectively. (Stern declined to talk fee numbers, and an unnamed TCW official disputed the supposed small-cap/midcap team fee change.)

TCW also confirmed that, over the next ten years, the energy/infrastructure team (which includes group managing director Blair Thomas and managing directors Kurt Talbot and Randall Wade) will slowly take a bigger piece of its fee, until taking 100 percent in 2020, which sounds like a spin-off.

"What we negotiated was long-term relaitonship that goes through 2020 where, over the period of time, we will be in business together, during that time they will become more self-sufficient and operationally independent," Stern reportedly said.

Stern also confirmed that he's still negotiating with the TCW/Crescent Mezzanine team, led by managing director Mark Attanasio. 

Edited by: Neil Anderson, Managing Editor


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