Florida State Board of Administration trustees Tuesday approved an incentive compensation plan for Ashbel C. Williams Jr., executive director and chief investment officer, and the rest of the investment staff, its first such comprehensive program.
The incentive program will apply to 62 staffers, including Mr. Williams, and will begin with the fiscal year starting July 1. The FSBA has a total staff of 205.
The incentive program could raise Mr. Williams current $389,500 annual salary by a maximum of 52.5% to $593,987, if the top measures of performance are reached.
The program will measure outperformance against benchmarks over rolling three-year periods, although in the initial phase, performance will be measured over a one- and then two-year period.
The program award takes effect for three levels of outperformance over benchmarks — 5 basis points, 25 basis points and 50 basis points — and pays incentive compensation, based on salary, at different rates for different levels of investment responsibility.
At the top range of the incentive program, Mr. Williams would receive incentive compensation of 17.5% for outperformance of 5 basis points over benchmark, 35% for outperformance of 25 basis points and a maximum of 52.5% for 50 basis points.
For other levels of staff, the three performance thresholds remain the same but the ranges of incentive compensation will depend on the level of investment responsibility, from a maximum incentive of 15% for an assistant portfolio manager to 37.5% for a senior investment policy officer.
For Mr. Williams, the program bases incentives on a combination of 85% total fund performance and 15% individual performance. For other staffers, the program bases incentives on varying degrees, depending on level of investment responsibility, on a combination of total fund performance, asset class performance and individual performance.
Incentive awards would be paid over two years, half the first year and, contingent on the staffer remaining with FSBA and in good standing, half the second year.
The program is designed to provide incentives for those staff members with the “greatest and most direct impact on investment outcomes,” Mr. Williams said Tuesday before the trustees
The FSBA investment advisory council on Monday approved the program, developed with the assistance of Mercer, FSBA’s investment and compensation program consultant, noting it would help retain and attract staff.
Dennis D. MacKee, FSBA communications director, said the goal “is to ensure alignment of interests” between investment staff and participants of the fund.”