Bill Gross was warned he would lose his bonus if he quit Pacific Investment Management Co. before the end of the quarter, Pimco said in a court filing, challenging the central claim in his lawsuit against his former employer seeking hundreds of millions of dollars.
“He had no employment agreement, and he acknowledged that leaving Pimco before the end of the third quarter of 2014 would render him ineligible for the profit sharing payments he now claims he is owed,” Pimco said in a court filing Monday.
In its first response to the substance of Gross’s allegations in the state court suit in Santa Ana, California, Pimco says the fund manager met with Chief Executive Officer Douglas Hodge and general counsel David Flattum on Sept. 25, 2014, the day before his exit, and was informed that he wouldn’t get the bonus if he quit. He left a handwritten resignation note the next morning, according to the filing.
Gross departed Pimco after a public falling out with other top executives as lagging results at the Pimco Total Return Fund, at the time the world’s largest mutual fund, led to a flood of redemptions. The firm’s co-founder, who now runs the $1.26 billion Janus Global Unconstrained Bond Fund, sued a year later, claiming he was ousted so that Pimco wouldn’t have to pay him his roughly $200 million cut of the bonus pool and so other managing directors could increase their compensation.
After his departure, Newport Beach, California-based Pimco’s assets under management fell more than 20 percent to $1.43 trillion at the end of 2015. The flagship Total Return Fund has shrunk to $87.8 billion from a 2013 peak of $293 billion.
Gross left behind a handwritten message “in the middle of the night, before walking out of Pimco’s offices for the last time,” saying his resignation was effective Sept. 26, 2014, at 6:29 a.m. Pacific time, according to Monday’s filing.