From the Editor...
As the responsibilities of independent mutual fund directors have both grown and become more complex, determining how to compensate these individuals also has become more challenging. And while those serving on boards that oversee the very largest fund families continue to see fairly steady growth in the take-home pay—around 6% on average last year—those sitting on boards overseeing mid-sized fund families are playing a bit of catch-up. On average, directors overseeing between $10 billion and $50 billion in assets saw their comp go up between 10% and 15% in 2015, in part because their jobs are becoming ever more challenging (in line with those at the higher end of the AUM scale) and in part so they can attract and retain the talent they need.
Management Practice Inc. provided FBV with an exclusive preview of its annual director compensation survey, and many of the findings—including the fact that "75 is the new 72" when it comes to mandatory retirement age—track those included in the Independent Directors Council/Investment Company Institute's 2015 Directors Practice Study, published last autumn.
Providing readers with this and other relevant market intelligence is our mission here at FBV. To that end, we've assembled an Editorial Think Tank populated with independent fund directors and other fund governance professionals to act as a kind of sounding board for us. The inaugural group includes representatives of various segments of the market—including traditional mutual funds, exchange-traded funds, a series trust, alternative investments, and large and small fund groups. This group will not direct our coverage or be involved in day-to-day decisions, but the members will provide feedback on how we're covering the market and what's happening in the fund governance space. We're likely to add members to the Think Tank as we move forward, so please let me know if you have an interest in serving; and if you don't, feel free to send me feedback at any time (positive and/or negative).
One area of coverage we've been on top of since launching in October is litigation against mutual fund advisers. There are some two dozen excessive fees cases brought under Section 36(b) of the '40 Act making their way through the courts, with T. Rowe Price Associates the latest to be hit with a suit. Meanwhile, closing arguments in the Sivolella v. AXA case are due to start soon, on May 23, and many will be watching and waiting to see how the judge rules in this first 36(b) case to go to trial.
Judges' rulings often have wide-ranging consequences, and a move by the board of Oakmark Funds proves this. The board has asked shareholders to vote on changes to the trust document and investment restrictions —including the addition of a forum selection clause, an attempt to control where future litigation can take place—and those changes mirror issues brought up in the well publicized Northstar v. Schwab case (which remains in the courts after being appealed again to the Ninth Circuit).
We also like to bring readers insight into other boards, and we've done that recently through an interview with Bill McCalpin, chair of the all-independent Janus Funds board. He and his fellow board members have been working on recruitment for the past several years, as a number of spots opened up around the table, and now they're focusing on education to ensure they're up to speed with regulatory and market developments and knowledgable about the increasingly complex fund lineup they oversee.
Next week, we'll be at the ICI's General Membership Meeting, and we're looking forward to this last gathering of industry folks before summer begins to set in (if it ever stops raining in the DC area). Hope to see you there!
For now,
Hillary Jackson, founding editor, Fund Board Views