<font color=red>Barron's OCT.30, Follow Up on CNC & Tom Pence
"
Did Pence leave because CNC would NOT sell him
Conseco Capital? "<vbg>
Now Russell ( of Russell Index 2000 fame ) is handling
CNC Capital.
Looks good.
Good riddance Pence.
Everybody wants to take a grab at CNC!!!
Keep your paws off doggies!!!!!
TA
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FUND OF INFORMATION
By David Franecki
Page F3
When we last talked with mutual-fund manager Tom Pence just a few weeks ago,
he seemed content at Conseco Capital Management, the money-management arm of
the big Indiana insurer. He liked the fact that Conseco allowed him and his deputies
to run the business as if it were their own, and heaped praise on new Conseco
Chairman Gary Wendt. What he failed to tell us was that he had been butting heads
with Conseco Capital's president and already had one foot out the door.
About a week after being profiled in Barron's, Pence quit his job at Conseco to
jump to Strong Capital Management in Milwaukee. "Our situation at Conseco had
continued to progress in a less-than favorable direction," he now says. "I really
wasn't looking for a job."
Apparently we weren't the only ones surprised at Pence's move. Conseco is suing
Pence for breach of contract in state court in Indiana. His resignation touched off a
chain reaction of departures, with four equity managers following Pence to Strong.
Pence claims he did not solicit the services of the fund managers and says the lawsuit
is without merit.
Conseco Capital historically did not bind its fund managers to employment
contracts.
However, the company has circulated to reporters an agreement that Pence signed,
dated July 31, that explicitly states Pence's duties and outlines a revenue-sharing
arrangement between the parties. But it does not appear to specify the length of the
agreement or mandate a specific term of employment.
Conseco Capital Management has lost about half its staff this year. Departures
include a "liftout" of about 18 bond managers and traders to Delaware Investments in
Philadelphia, in July; the loss of the entire institutional sales team, and now most of its
equity team. The most obvious factor in the exodus is the well-chronicled troubles of
parent Conseco, but several former Conseco Capital employees point the finger at
group president and CEO Maxwell Bublitz.
"If you have a charismatic, likable leader with vision, people will tend to stick around
longer," grouses one former Conseco Capital employee who left this year.
This former employee described Bublitz as "not an easy guy to like," although most
acknowledge that Bublitz was in a difficult position. Bublitz would not comment
about the reasons behind the mass exodus, but in a written statement said "we've
retained superior talent and brought in top-notch replacements."
A number of Conseco Capital employees, including Pence, had suggested to Bublitz
that the unit be spun off or bought by its employees, but Bublitz balked. A Conseco
Capital employee says an employee-led leveraged buyout of the group would have
jeopardized Conseco's existing institutional accounts because it would have
constituted a change in manager. Bublitz did not address the proposed buyout in his
statement.
It's clear that Pence's resignation has touched a nerve. In addition to suing him, the
company has issued a press releases suggesting he simply cashed in on the firm's
success. Several former employees say the exodus could have been avoided if the
parent company hadn't had so many problems, or if Bublitz had given his staff
greater assurances earlier in the year.
Conseco last week announced that it is calling in some relief. It has hired Frank
Russell Co. as a "transition management specialist" to help it hold down the fort in the
wake of so many departures. Frank Russell, best known for its stock indexes, also
manages $65 billion in assets.
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