Florida State Board of Administration, Tallahassee, could raise the combined annual base salary and incentive award of Ashbel C. Williams Jr., executive director and chief investment officer, 70.3% to $553,500, if recommendations of its investment advisory council are adopted by trustees.
Mr. Williams' base salary would rise to $410,000 a year from the current $325,000 and he would be eligible to participate in an annual incentive program targeted at 35%, or $143,500, of his base salary under the proposal.
Mr. Williams hasn't had a raise since he was recruited in a national search to rejoin the system in October 2008 as executive director and CIO, according to a report of the FSBA investment advisory council's compensation subcommittee. He isn't eligible for incentive compensation under the current compensation structure, confirmed John Kuczwanski, FSBA communications manager. Mr. Williams was also executive director from 1991 to 1996.
The FSBA oversees $168.5 billion.
The proposals are based on recommendations from Mercer, which was hired by the investment advisory council and worked with the subcommittee, to examine the competitiveness of the pay structure of the 194 FSBA staff members, including Mr. Williams.
The set of recommendations “reflects market levels for the top public pension funds” and will “close the gap between SBA salaries and competitive market salaries,” according to a memo to the subcommittee from Josh Wilson, Mercer partner. “This will enable the SBA to recruit, retain and motivate qualified, high-performing staff, while improving the alignment of interests between SBA employees and stakeholders and minimizing human capital risk.”
Closing the pay gap would cost $2.3 million annually, or 15.8% of current salaries. FSBA's current payroll is $14.5 million.
For Mr. Williams, one comparison that Mercer used is the base salary for the CIOs of the five largest U.S. public pension funds, excluding FSBA, ranging from $300,000 to $480,000, with a median of $410,000. “Four of the five individuals received incentive awards, which resulted in a total compensation range for these five CIOs of $300,000 to $876,000, with a median of $534,375.” Mr. Wilson noted.
During Mr. Williams’ tenure since October 2008 through Jan. 31, the FRS has returned 7.62% annualized, 70 basis points ahead of its customized benchmark, Mr. Wilson’s memo noted.
For the FSBA’s budget for the next fiscal year, beginning July 1, the proposal requests $1.6 million to cover 70% to 75% of the base salaries gap, while requesting the remaining $700,000 of the $2.3 million competitive compensation gap in the following fiscal year, along with 50% of the maximum incentive award pool, estimated at $1.1 million. For the fiscal year beginning July 1, 2015, the proposal would budget the full potential $2.2 million incentive award. In all, 56 employees would be eligible for incentive awards, the report states.
Under Florida statute, the FSBA’s operating costs are paid from the money it manages through assessment of a combination of flat fees and asset-based fees, for investment, administrative and other services. The proposal plans no increase in the fee structure for the next fiscal year, although it plans to budget a 6% increase in fee revenue based on the current fiscal year’s strong investment performance and anticipated increased contributions in the next fiscal year, the IAC subcommittee report said.
“Recognizing that they are an advisory council, the implementation of the recommendations will be subject to what degree it can be implemented within budget constraints,” Dennis D. MacKee, FSBA communications director, said in an e-mail. “That will likely be finalized for trustee approval” for their June 25 meeting.