BT profit-share scheme lures ABP executive

BT Financial Group’s attraction of a senior investor from Europe’s largest pension fund shows an imminent profit-sharing structure is already beginning to work, according to general manager Dirk Morris.

Joe Bracken, an Irishman who most recently ran a tactical asset allocation program for Dutch mega-fund ABP, will join BT in early July as the head of a new ‘macro’ group. The group is one of four quasi-boutiques being established by the Westpac-owned manager, each with their own ‘shadow’ financial statements, as a way of providing profit-linked ‘variable remuneration’ to investment professionals. “;I sat down with Joe earlier this year and talked him through the boutique structure,”; according to Morris, who said he’d long wanted to employ Bracken after both worked at JPMorgan in London several years ago. “;He’s agreed to join us, he’s moving his family out here too so it’s a big commitment,”; he said. Morris also credited the pending restructure for last month’s recruitment of Jim Taylor from Colonial’s ‘GDP Plus’ Australian equities team. “;In terms of base [salary], Jim is moving sideways from a no.2 role to a no.2 role, but he obviously saw some potential in what we are doing [on the variable remuneration side],”; Morris said. Taylor will report to Crispin Murray, who under the restructure will become head of BT’s ‘equities’ group, incorporating large and small cap Aussie shares, and LPTs. Another quasi-boutique will be the ‘incomes’ group, under John Sorrell and Scott Osborne, which will make bottom-up calls across the cash and credit markets. Joe Bracken’s ‘macro’ group will make top-down calls across duration, currencies and other components associated with global macro hedge funds, one of which BT plans to launch. The three alpha-producing groups will feed Al Clark’s ‘multi-strategy’ group, incorporating the alternatives business (principally the hedge fund-of-funds), the traditional balanced fund business and the external manager relationships such as AQR (global equities) and AEW (global property). Morris hoped that at least the equities group would be operating under the new profit-sharing arrangement by the turn of BT’s fiscal year in September. “;The Westpac board has given its broad support, it’s now a matter of getting it to approve uncapped compensation, and rebuilding the general ledger system [to accommodate the separate financials].”; Morris was confident Westpac shareholders would understand the need for the profit-sharing arrangements, which are being designed to vest over three-to-five year periods. “;That’s the length of track record you need to maintain for a successful funds management business,”; he said.