State of Wisconsin Investment Board, Madison, paid $13.3 million to staff in incentive compensation rewarding performance for 2013 for exceeding benchmark returns largely over the previous five years, according to a statement from SWIB.
The investment staff received $11.5 million of the total incentive compensation, said Vicki Hearing, SWIB information officer, in an e-mail.
Eight-five percent of incentive compensation is based on a rolling five-year performance, according to the statement.
SWIB — which oversees $104.1 billion in assets, including the $94.6 billion of the Wisconsin Retirement System — awarded the incentive compensation to 143 members of its total staff of 153, Ms. Hearing said. Of the 72 investment management staff, all 65 members who were eligible for incentive compensation received rewards, Ms. Hearing said.
By contrast in 2013, SWIB paid to members of its full staff, including those in investment management, a total of $8 million in incentive compensation for performance for 2012, Ms. Hearing said.
In all, SWIB paid $24.3 million in cash compensation in 2013, including the $8 million in rewards for 2012 performance, whose payment lags a year, Ms. Hearing said.
The $13.3 million in incentives paid for 2013 performance will be included in total compensation for 2014 once the year is completed.
The number of staff members might differ from year to year, Ms. Hearing noted.
SWIB’s core fund returned an annualized 12.5% for the five years ended Dec. 31, outpacing the annualized 11.6% return of its customized benchmark. Last year, the fund returned 13.6%, outperforming its 12.9% benchmark return, Ms. Hearing said. The WRS core fund has $87.5 billion in assets.
“SWIB is a large, complex, sophisticated defined benefit investment organization that adds value at a low cost for participants and taxpayers,” Michael Williamson, executive director, said in the statement.
“The current compensation plan recognizes that investment management is a specialized skill,” the statement said. “Competition for talent comes largely from the private sector.”
“Over the past five years, staff’s investment performance above market returns has added $2.65 billion to the WRS,” the statement said.
