Bogle reversed on pay issue

Vanguard Group Inc. founder John C. Bogle wasn't always so gung-ho to disclose the compensation of top mutual-fund executives.

As Bogle presses a proposal to require fund companies to disclose more about their leaders' pay, he's being called a hypocrite by an old adversary who remembers Bogle's prickly reaction when his own compensation of $2.6 million for 1991 was reported, before he retired as chairman of the Pennsylvania mutual-fund giant.

In the May issue of the Independent Adviser for Vanguard Investors, editor Daniel P. Wiener wrote that Bogle's recent proposals make him ''the 180-degree man." In an interview, Wiener said Bogle oversaw steps that removed details about executive compensation from Vanguard's fund filings later in the 1990s, and called him a ''hypocrite."

''It's amazing Jack Bogle is so vehement on this topic," Wiener said, even though he supports more disclosure himself. He said a more likely motive is that Bogle wants to tweak the current Vanguard chairman, John J. Brennan.

Bogle dismisses that notion, and said the data disappeared from Vanguard's filings in the 1990s because of new SEC reporting guidelines. Since other companies weren't required to report pay, he said, ''I didn't see any reason to disclose."

Bogle called Wiener's charge of hypocrisy ''fair enough to say" and acknowledged he didn't like it when Wiener reviewed documents filed by all Vanguard funds for 1991 and calculated Bogle's compensation at $2.6 million, a widely quoted figure in the business press.

''I didn't like having it in the public eye," Bogle said. ''It looked like I was making a lot of money relative to others in the business, and I was really tail-end Charlie."

Since then, soaring executive pay has strengthened the case for disclosure, he said. ''I think I'm allowed to say: When the facts change, I change my mind," Bogle said, quoting John Maynard Keynes, the British economist.

Wiener's critique is likely to draw more attention as mutual-fund pay issues heat up, though even some who regard Bogle as the fund industry's loose cannon say, as Wiener does, that they support more disclosure.

One is Carl Frischling, a lawyer active in the Mutual Fund Directors Forum, who said he would at least like to know the pay of portfolio managers. He called Bogle a maverick who argues well. ''But those of us who know him or have experienced the whole thing, he's flip-flopped several times," Frischling said.

For instance, he said, Bogle wasn't so vocal about wanting more independent directors on company boards. (Bogle said in response that he long favored having at least one independent director, but came to favor a majority of directors in the wake of abuses at other companies.)

Bogle now talks numbers and said Wiener's previous estimates were about right. He was paid roughly $200,000 in salary and a $300,000 bonus in 1991, he said, plus around $2 million under a ''partnership plan" that gave employees a percentage of Vanguard's profits.

His salary and bonus went up around 7 percent annually in following years, he said, but in the early 1990s he gave back about 40 percent of his partnership shares to Vanguard. He did so ''because I thought it was getting out of hand," he said. ''I didn't want to be greedy, or appear to be greedy."

Bogle said he currently receives an annual retainer ''in the very low six figures," plus a similar amount to operate an office.

He said it is ''not my place" to discuss what Brennan receives. Vanguard doesn't report Brennan's total pay and like other companies argues it's irrelevant to investors.

''Vanguard continues to hold that a fund's overall operating expenses -- not the compensation paid to any one crew member -- is far more relevant and meaningful," said spokesman John Woerth.

Ross Kerber can be reached at kerber@globe.com.