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University of California gives CIO $841,000 bonus despite year of negative returns

Jagdeep Singh Bachher

The University of California Regents approved an $841,096 bonus for Jagdeep Singh Bachher, chief investment officer and vice president for the fiscal year ended June 30, according to a posting of regents' actions from its Nov. 16-17 meeting, on the UC website.

Mr. Bachher was paid a salary of $632,380. With the bonus, his total compensation amounted to $1.47 million. For the prior fiscal year, Mr. Bachher received a bonus of $874,838 on top of $615,000 salary, for a total compensation of $1.49 million.

The posting said the university's investment results for the year ended June 30 “were lackluster,” trailing its benchmark by 81 basis points, which resulted in a net loss of $791 million.

But it notes for the two- and three-year periods ended June 30, the annualized results were ahead of the benchmark by 50 basis points for both periods. “This resulted in a net gain to the portfolios of approximately $1 billion for the two-year period and $1.5 billion for the three-year period (over and above that which would have resulted in the absence of active management),” the posting said.

Awards are based on a rolling three-year assessment against performance benchmarks. Mr. Bachher was in charge of managing more than $97 billion for the university, including its endowment, pension plan and other investment pools, and the bonus is calculated on the performance of all the entities.

Mr. Bachher has cited volatile markets for the -3.4% one-year return of the system's $9.1 billion endowment as of June 30, 1.7 percentage points below its benchmark.

The university's $54.1 billion defined benefit plan posted a -2% return for the same period, 1.2 percentage points below the benchmark.

The regents also awarded Arthur Guimaraes, associate CIO and chief operating officer, a bonus of $210,892, 63% of his base salary of $334,750. In the prior year, Mr. Guimaraes received a bonus of $170,625, 52.5% of his base salary of $325,000.

The regents also approved a major policy change to future bonus calculations. The current plan allows awards to be paid in years when negative returns are realized, as long as UC's performance was better than the benchmark. New changes eliminate key components of bonus awards when the three-year rolling average is negative, even if it surpasses the benchmark.

Other UC investment staff also received bonuses, but they are not subject to regents approval.

Julie Lydon, a spokeswoman for UC, did not respond to requests for additional comment.