All Reports & Bulletins
Measuring the Effectiveness of Fund Boards Print E-mail
Governance Committee
Written by C. Meyrick Payne and Sara D. Yerkey of Management Practice Inc. (MPI)   
     Every year fund directors undertake a carefully conducted but somewhat subjective board effectiveness evaluation. Typically, counsel to the independent directors administers a well-honed questionnaire about independence, preparation and attendance. The directors often confidentially review their own performance in addition to the board as a whole. The process creates an opportunity for discussion and ultimately the strengthening of the board, benefiting the fund shareholder. The addition of tangible measurements, which are not commonly used, can give further insight and enhance the evaluation experience. This bulletin explores a quantitative focus for measuring fund board effectiveness.
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Industry Dynamics Drive Fund Board Compensation Higher; 5% at Larger Fund Complexes - April 2011 Print E-mail
Board Compensation
Written by C. Meyrick Payne, Jay Keeshan and Sara Yerkey of Management Practice, Inc.   

     Management Practice Inc. (MPI) has just completed its 18th annual “Survey of Mutual Fund Director/Trustee Compensation and Governance Practices”, with data covering 1,971 directors from 374 fund families. Full reports and specific board compensation comparisons are available from MPI.

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Industry Profitability Returns as Average Assets Rise in 2010 Print E-mail
Contract Committee
Written by Meyrick Payne and Sara Yerkey of Management Practice Inc. (MPI)   

     The most important function performed by mutual fund trustees is the annual review of investment management arrangements.  One of the factors in this review is the analysis of the investment manager’s profitability. The Jones vs. Harris case has reinforced the contract renewal process that has been conducted for the past 30 years, and has emphasized that the assessment of the advisor’s profitability remains a necessary step.

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Mergers and Meetings Drive Moderate Growth for Fund Director Pay in 2009 Print E-mail
Board Compensation
Written by C. Meyrick Payne, Jay Keeshan and Sara Yerkey of Management Practice, Inc.   

     Management Practice Inc. (MPI) has just completed its seventeenth annual “Survey of Mutual Fund Director/Trustee Compensation and Governance Practices”, with data covering 1,902 directors from 374 fund families. Copies of, and specific comparisons to, the survey detail are available from MPI.

     Year-over-year board compensation (same directors year over year) increased an average of 7.1% in 2009 over 2008 levels.   While a few boards took pay cuts over the past couple of years (often by opting not to take pay for selected meetings), most kept their pay roughly flat in 2008.  2009 saw a return toward normalcy in the markets as the year progressed, and most boards reverted to their normal pattern of increases.  This had the effect of increasing pay for many due to additional meetings necessitated by the financial meltdown.   Furthermore, some boards were affected by fund mergers and took on a significant amount of additional funds or assets; accordingly, a few took measured pay increases.

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Capital Requirements for Mutual Fund Investment Advisers - March 2011 Print E-mail
Full Board
Written by C. Meyrick Payne, Management Practice and Ian Campbell-Laing   

     The recent economic crisis has caused some mutual fund directors to ask for guidance regarding how much, if any, capital is needed to manage a mutual fund advisory business. This is an unusual question as most fund industry observers have always assumed that mutual fund management was more a function of capability than capital. Nevertheless with the report of the Financial Crisis Inquiry Commission, hot off the press, perhaps it is time to explore whether mutual funds are part of the shadow banking system and thus subject to systemic strain. Furthermore the demise in September 2008 of the Primary Reserve Money Market Fund was, in part, the result of the manager, the Reserve Group, not being well enough capitalized to sustain $1 per share net asset value, such that when its Lehman Bonds became impaired, it “broke the buck”. And it was the first to do so in over fourteen years.

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