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ASSET OWNERS

CalPERS to vote on bonus eligibility, raises for top investment staff

The thorny issue of compensation for the CEO, chief investment officer and other top officials of CalPERS is expected to be voted on June 20 by the pension fund’s performance, compensation and talent management committee.

Agenda materials show that if approved by the committee, and then the full CalPERS board on June 21, CEO Marcie Frost would be eligible for a maximum bonus of 40% of her current $300,000 salary, while CIO Theodore Eliopoulos could earn up to a 75% bonus of his $543,780 base salary.

The potential bonus scales are for the fiscal year beginning July 1 and remain unchanged from this year.

Other top staffers could receive base salary increases of 5% including Matthew Jacobs, general counsel, who makes $338,000 a year, and Wylie Tollette, chief operating investment officer, who makes $378,000.

Board members of the $323.9 billion California Public Employees’ Retirement System, Sacramento, have discussed at meetings their concerns that the public will perceive that compensation is too high for top staff, creating a backlash despite the fact salaries are not competitive with what investment professionals and other top officials could make in the private sector.

The agenda material notes as much.

“Risks associated with adopting a revised compensation structure could include a negative public perception for considering compensation increases,” the agenda material notes. “However, in the event existing salary ranges are not competitive, there is a risk of potential difficulty in the hiring and retention of qualified candidates for key positions.”

Mr. Eliopoulos and Ms. Frost won’t know until the fall what their bonus will be for the current fiscal year that ends June 30.

The last time Mr. Eliopoulos received a bonus was for the fiscal year ended June 30, 2016, when he was paid a $248,026 bonus, or around 45% of his base pay. Ms. Frost joined CalPERS in late 2016, so she has not yet received a bonus payment.

Ms. Frost’s bonus is largely based on her organizational leadership but she also is judged on whether CalPERS is able to surpass its investment benchmark and by how much over a five-year period. Mr. Eliopoulos’ bonus is mostly dependent on how well CalPERS does vs. its benchmark over a five-year period but the pension fund’s returns are also compared to a peer group of other institutional investors.