Ray Dalio, multibillionaire and founder of Bridgewater Associates—the largest hedge fund in the world—retired in October of last year to great fanfare, with much lauding from his and his firm about the transition. But things were much thornier behind the scenes, reports an article in The New York Times. Dalio, who declined to comment for the piece, apparently refused to surrender control of Bridgewater until the firm agreed to pay out billions of dollars for the rest of his lifetime through a select class of stock.
In 2021, Dalio made remarks on CNBC dismissing China’s human rights track record as relatively inconsequential, infuriating Bridgewater clients, politicians such as Senator Mitt Romney, and the firm’s employees alike. That appears to have been part of the catalyst to oust Dalio from controlling day-to-day operations at Bridgewater, which manages about $125 billion for public pensions and sovereign wealth funds. And while Dalio has often promoted workplace ethics and “radical transparency” by making internal meetings available to the entire firm and encouraging employees to rank each other, the agreement under which he stepped down has been kept secret, with employees telling The New York Times that they could be sued by Bridgewater if they spoke publicly.
Though Dalio and Bridgewater have been planning for his retirement since 2009, the firm ran through a number of potential executives as each were either fired or quit over the years. In one instance, Eileen Murray sued Bridgwater for discrimination in 2020 (the case was settled out of court). In 2018, Bridgewater pledged to shift control of the firm from the founder (Dalio) to top employees. Those employees were then ordered by Dalio to purchase his shares with their personal funds, arranging 10-year loans for anyone who couldn’t afford to buy the shares outright and suggesting to those who refused that they should quit, according to current and former employees who spoke to The Times on the condition of anonymity.
As Dalio refused to hand over the reigns without serious concessions, Bridgewater finally agreed to pay out high dividends of a new, select class of private stock—known internally as “Ray’s shares”—before anyone else at Bridgewater receives payment. In exchange for what could amount to billions of dollars, Dalio gave up his titles, though he remains a member of the board and “mentor to the C.I.O.s and investment committee.” Meanwhile, one of the firm’s new executives, Nir Bar Dea, has begun to dismantle some of Dalio’s legacy at Bridgewater, such as the mandatory employee ranking (it’s now optional).
Bridgewater garnered hefty returns for its investors in the early part of last year, but fell in the fourth quarter and then dropped 7% more in January. The firm isn’t the only major company to contend with founders who have a hard time pulling away completely. Starbucks, Salesforce, Google, and investing giant Carlyle have all seen their founders pop in and out of upper management roles over the years, according to the article.