Corporate pension plans offer their chief investment officers a combination of base salary and performance-related pay roughly twice what the CIOs of public or Taft-Hartley plans are garnering, according to a survey by executive recruitment firm DHR International.
The survey of 175 pension plans — 100 public, 50 corporate and 25 Taft-Hartley — with a median fund size of $12.5 billion showed the bulk of public and Taft Hartley respondents reporting base CIO salaries of $150,000 to $250,000, and total compensation of $225,000 to $350,000.
The bulk of corporate plan CIOs reported base salaries of $250,000 to $350,000 and total compensation of $500,000 to $800,000.
Despite that gap, performance of public and Taft-Hartley plans over the past two or three years has been as good if not better than corporate plans, the report noted.
The survey showed compensation increasing with the scale of a pension fund’s assets, even though there’s no evidence that larger funds have enjoyed superior performance.
In a telephone interview, James L. Schroeder, an executive vice president with DHR who worked on the survey report, said with plan sponsors increasingly pursuing strategies aligned with their specific circumstances, drawing broad conclusions from the survey results is harder now than a decade ago.
The factors differentiating these plans have made it more difficult to compare the jobs being taken on by different CIOs, Mr. Schroeder said.
The survey showed the rise of liability-driven investing among corporate pension funds lifting their median allocation to domestic fixed income to 38.8%, almost twice the 20.3% allocation of public funds and well above a 27.1% allocation for Taft-Hartley funds.
Taft-Hartley funds had a median allocation of 37.3% to domestic equities, outpacing a 30.6% allocation for public funds and a 29.8% allocation for corporate funds.
Public funds, meanwhile, had the highest combined median allocations to private equity, hedge funds, real estate and commodities, at 19.9%. Taft-Hartley plans followed with 18.8% and corporate plans reported 15.8%.
The survey showed all plans looking to boost their allocations to alternatives, with a net 31% of respondents anticipating an increase in allocations to real estate; a net 25% expecting to increase commodities exposure; a net 15% predicting more money for hedge funds and a net 13% looking to add to their private equity investments.
On the losing side were domestic and global/international equities, with a net 17% of respondents indicating plans to decrease their exposure to global/international equities and a net 12% looking to trim their domestic equity holdings. A net 13%, however, said they will increase their emerging markets equity exposure.