Faltering state pension system execs get taxpayer-funded bonus
This is becoming such a routine story you can almost just write it by template with a few key insertions. Insertion #1: name of failing institution. Insertion #2: bonus their chief executive received. In any case, the Sacramento Bee has the scoop:
California's two biggest public employee pension funds handed out millions of dollars in bonuses last year to their top executives and investment managers, despite losing billions of dollars.
The biggest bonus check, $322,953, went to Christopher Ailman, chief investment officer of the California State Teachers' Retirement System. It nearly doubled his base pay of $330,000 for fiscal 2007-08.
Ailman's counterpart at the California Public Employees' Retirement System, Russell Read, received a $208,677 bonus to his $555,360 base pay in August, more than a month after he had resigned from the fund's top investment job.
Despite continued losses in the market, both funds expect to cut more bonus checks, which they call "incentive awards," this summer.
Retirement fund officials say bonuses like those paid to Ailman and Read help attract and retain top talent. It's also cheaper than hiring outside help to manage investments, they say.
Cities, like Pasadena for example, contribute money to these funds to secure pensions for their employees. CalPERS put a lot of that money into real estate, which has made the funds value plummet. Meanwhile, in an attempt to recoup losses, the institution is now pursuing a risky plan to buy bad mortgage assets from national banks in a hope that it can take advantage of firesale prices.
With regards to the pay out, our own representative Anthony Portantino has been attempting to limit top executives pay checks to $150,000 during the fiscal crisis. The legislation also called for a freeze on bonuses, but according to the Sacramento Bee, that is no longer happening:
The bill, AB 53, initially included a freeze on bonuses, but those provisions were removed "over concerns of breaking existing contracts," said Portantino spokesman Michael Tamariz.
CalPERS has opposed the bill, saying that the mere whiff of limiting state employee pay has already hobbled its ability to compete for the best talent.
"(We've) lost two potential investment candidates in recruitments lately due to the uncertainty of pending legislation that would affect incentives," said CalPERS spokeswoman Pat Macht.
UNDER THE DOME
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