As part of Power Financial’s deal with Marsh & McLennan to acquire Putnam Investments, Power agreed to give a large portion of Putnam’s stocks to top executives and investment managers to give them an incentive to stay with the company, The Wall Street Journal reports. The hope is that will help stem the outflows that have dogged the company for the past five years.

“The plan will be a key retention factor over the next three years,” said Charles “Ed” Haldeman, Jr., chief executive officer of the firm.

Reginald Laing, an analyst with Morningstar, applauds the move. “If they hope to turn around performance in some of their more popular funds, keeping good people is going to be critical,” Laing said.

But Haldeman is optimistic that those outflows are lessening, noting that the fund lost $12 billion in assets in the first six months of the year, but only $3 billion in the third quarter. Full-year results for 2006, he added, will indicate “a substantial improvement in reducing outflow.”

Subscribe Now

Access to premium content including in-depth coverage of mutual funds, hedge funds, 401(K)s, 529 plans, and more.

3-Week Free Trial

Insight and analysis into the management, marketing, operations and technology of the asset management industry.