The bonuses that
This is the first time the firm has cut its bonuses, based on years of service and position, since it introduced them in 1984 at $3.84. Since then, the bonuses have come to mean thousands of dollars in additional income for many of Vanguards employees.
Vanguard has been through financial strain, particularly in 2002 when it added 800,000 accounts that had to be serviced but saw its mutual fund assets decline 4%. As well, the firm cut its average mutual fund cost ratio last year from 27 basis points to 26 basis points.
"The past three years tested us more than any of us thought we could have been tested," Chief Executive Officer John J. Brennan reportedly told employees. Some Vanguard employees said they feared their jobs could be on the line, even though Brennan told employees that he expects earnings and bonuses to improve next year.