PIONEER AND ITS BOSS ARE ALL OVER THE PLACE: INVESTORS CRITICIZE BOTH FOR SPREADING SELVES THIN

Pioneer Group Inc. CEO John F. Cogan Jr. might be the busiest man in Boston.

Not only does he run the nation’s 27th-largest mutual fund company, he’s also an active partner at Hale & Dorr, a prestigious law firm. And he finds time to serve as chairman of the Boston Museum of Fine Arts’ board of trustees and to jog regularly.

Oh, and he’s 71 years old.

“This is a guy who loves to work,” Pioneer Chief Financial Officer William Keough says of his boss, who was too busy to sit down for an interview last week. “He literally loves to work.”

Mr. Cogan, who is notorious for leaving employees voice mail messages during the wee hours of the morning and on weekends, is the architect of Pioneer’s global diversification strategy. That strategy, which began in the 1980s with the formation of a gold-mining business in the Republic of Ghana, is now being blamed for Pioneer’s dismal performance on Wall Street. And some are beginning to cite Mr. Cogan’s other life as a high-profile lawyer as a major reason Pioneer’s stock is lagging behind its mutual fund industry peers.

“Pioneer’s financial and human resources are spread all over the place,” says Michael S. Beall, an analyst at Davenport & Co., a Richmond, Va.-based money manager that holds 300,000 to 400,000 shares of Pioneer stock. “One could definitely argue that perhaps the company would have been more successful in its core business had it not spread itself so thin.”

While other public investment firms’ shares have skyrocketed an average of 60.21% over the 12 months ended April 9, Pioneer’s have climbed a mere 28%, according to Lipper Analytical Services Inc. in New York. Shares of the firm have slumped about 6.6% since hitting a 52-week high of $33.88 on Dec. 5.

The mediocre stock performance comes despite the fact that Pioneer posted earnings of $29.2 million last year, or $1.14 a share, up a whopping 55% from $18.9 million, or 74 cents a share, from the year before. Overall revenues grew 43%, to $342.8 million.

Though many of Pioneer’s far-flung ventures are long on potential, they have been short on profits. Pioneer’s ambitious timber operations in the Russian Far East, for example, lost money last year for the second straight year. Its Ghanaian mining venture was also a big drain on earnings, and is likely to be so again in 1998, thanks to falling gold prices. Pioneer also leaked cash through a fledgling financial service business in the Czech Republic and a real estate management company operating in Poland and Russia.

questions are raised

The company may be paying a heavy price for being too diversified. Even though more than 90% of the company’s earnings come from its money management business, its stock is trading more like that of a gold or timber company.

Pioneer’s proclivity for having a lot of irons in the fire obviously comes from the top.

Mr. Cogan is on the payroll of both firms. Last year, Pioneer paid him a hefty $1.08 million, plus stock options potentially worth another $1.09 million. How much he received from Hale & Dorr last year is as yet unknown, but partners in the firm took home an estimated $510,000 each in 1996, according to the trade magazine American Lawyer.

Mr. Cogan first discovered Pioneer in the 1950s as a Hale & Dorr lawyer doing work for the money manager’s founder, Philip Carret. In 1963, Mr. Cogan organized a small group of investors to buy out Mr. Carret, and the partners took the company public in 1978. (Mr. Carret is still active in the firm at the age of 101.)

All along, Mr. Cogan continued to practice at Hale & Dorr. He served as the firm’s managing partner from 1976 to 1984 and as its chairman from 1984 to 1996.

The relationship between the companies is cozy. They share the same building in Boston’s financial district. And Pioneer paid Hale & Dorr about $1.1 million for legal services in 1997, according to documents filed with the Securities and Exchange Commission.

Though there’s nothing unlawful about it, Mr. Cogan’s dual role raises questions about whether Pioneer might fare better if it had a chief executive focused exclusively on the money-management business.

Mr. Cogan’s divided focus may also help explain why Pioneer has been losing market share to such rivals as Putnam Investments and Franklin Templeton Distributors Inc. Pioneer’s share of the $3.2 trillion mutual-fund stands at 0.627%, down from 1.134% in 1990, according Boston-based consultancy Financial Research Corp.

“I wouldn’t put a dime into a mutual fund whose chief executive has another full-time job,” says Nell Minow, a principal of Lens Inc., an activist investment fund in Washington, D.C., that champions shareholder rights issues. “I want to make sure the people I give my money to are as interested in doing well with it as I would myself.”

the very model of a CEO

Pioneer executives are sensitive to talk that Mr. Cogan’s time and attention on the fund business are divided. “He is more than a full-time CEO at Pioneer,” CFO Mr. Keough says adamantly.

After describing Mr. Cogan as a “very active” and “top-billing” partner two weeks ago, a spokesman for Hale & Dorr retracted the statement late last week, saying, “He’s much more active on the Pioneer side these days.”

Good thing. While Pioneer’s 1997 performance generally garnered praise from analysts, it wasn’t without smudges. Its U.S. mutual fund sales, for example, climbed 10.1%, down dramatically from the 48.5% increase seen in 1996. Net inflows also plummeted to $760 million, from $1.2 billion in 1996, as redemptions edged up two percentage points to 12% of assets.

At least some of the redemptions were spurred by the departure of star fund manager Warren Isabelle, who joined crosstown rival Keystone Investments Inc. early last year.

On the bright side, the redemption rate is still below the industry average of 15%. “Our redemption rate is not only not a concern but rather is a positive for us,” says Mr. Keough.