ALBANY, N.Y. - Alan Sullivan is the latest investment professional to join the procession leaving the $96 billion New York Common Retirement Fund for more lucrative positions in the private sector.
The assistant deputy comptroller responsible for real estate and private investments, Mr. Sullivan left last month to join a suburban New York City developer.
The departure of investment professionals from pension funds is an industrywide problem, but New York Common has been particularly hard hit by staff losses during the past 15 months.
Other departures include:
Private equity investment officers Tom Laders and Anne Collins, both of whom left to join the private equity group with Fleet Equity Partners, Providence, R.I.
Mike Arpey replaced Mr. Laders for a salary of $84,329.
Joseph DelCasino, head of mortgage investing for the pension fund, who left this fall to join WSW Capital, a unit of New York City money manager Wood, Struthers & Winthrop Management Corp.
Mr. DelCasino is the chief administrative officer for WSW's private placement alternative investment activities.
Susan Kenneally, director of international investments, left to take a position in the private sector. The retirement fund declined to divulge her new position.
Patricia Gerrick replaced Ms. Kenneally for a salary of $86,840.
Money is the reason pension fund investment professionals are leaving for the private sector. They can earn more, and the investment firms don't have to pay top dollar to attract them.
"Bonuses on Wall Street are going to be up a minimum of 30% in 1997," said Martin Nass, a partner and real estate practice leader with Lamalie Amrop International, a New York executive search firm.
"People at the top pension funds look at that and say 'My god.' Those (pension fund) people see those numbers and say 'I want to participate in this.'
"They take their experience, which is substantial, and look elsewhere," said Mr. Nass, who recruits candidates from the pension funds.
"It's going to be extremely difficult for the pension funds to replace the exodus of talent that is now departing because their compensation structure doesn't allow them to pay market rates."
On the flip-side, the investment management companies can find relatively cheap but experienced labor in the pension fund community.
"They (investment firms) can pick these people up with 10 to 15 years' experience, give them a hefty increase and still pay them less than if they went to Wall Street to recruit," said Mr. Nass. "Why shouldn't they take advantage?
"A lot of REITs and operating companies are taking advantage of their availability."
Private equity and real estate management firms have been particularly aggressive in their hiring of late. Both businesses have made a large number of investments, and private equity, in particular, has raised record amounts of money.
"The recent job losses have occurred in programs - real estate, alternative investments and international - that were not as large or visible during the prior administration," said H. Carl McCall, New York comptroller and sole trustee of the pension fund, in a written response to a list of questions.
The comptroller's office is searching for replacements for Mr. Sullivan and Mr. DelCasino.
The salary range of $105,000 to $110,000 for Mr. Sullivan's position would be respectable in most industries. But that pay range might not be attractive enough to someone who would be responsible for a $2.5 billion real estate portfolio.
Mr. Sullivan was earning almost $105,000 when he left.
Mr. Laders was earning about $85,000; and Ms. Collins, $81,000.
Mr. Sullivan's departure might also have been hastened because he received additional duties of overseeing alternative investments with, according to the comptroller's office, no increase in pay when Ms. Collins left.
Mr. Sullivan was unavailable for comment.
Mr. McCall attributes the turnover to competition from the private sector.
Mr. McCall said he has expressed concern about salaries of public officials.
"The fund is limited in the amount it can pay staff by Civil Service law and other regulations," Mr. McCall wrote. He said he has directed the staff to "explore options to address this issue."
Mr. McCall should put his staff in touch with Sheryl Pressler, chief investment officer with the California Public Employees' Retirement System.
According to Mr. Nass, Ms. Pressler was very assertive with the CalPERS board of trustees in getting board members to increase the real estate investment officer's salary enough to attract David Gilbert from J.P. Morgan & Co. Inc.
"When I placed Dave Gilbert," said Mr. Nass, "I told Sheryl Pressler you can't get the caliber of person that you are looking for at the price you are limited to.
"She got the compensation structure changed, and it allowed us to bring in a guy like David," said Mr. Nass.
As an alternative, Mr. Nass suggests Mr. McCall look to Fortune 500 companies for experienced investment people who might be retiring, but are still young enough to work.
"They don't want to go out to pasture," said Mr. Nass. "You pick up talent and maturity."