The board of the $360 billion California Public Employees' Retirement System, Sacramento, on Wednesday approved giving CEO Marcie Frost a 4% raise resulting in a salary of $330,720 for the 2019 fiscal year and a 26.7% bonus of $84,873 for the 2018 fiscal year.
Following the board meeting, California Treasurer John Chiang, who is a member of the CalPERS board, issued a statement calling for an independent review by a neutral third party into whether Ms. Frost made misrepresentations regarding a college degree. Even so, Mr. Chiang voted for the raise and the bonus. Margaret Brown was the only CalPERS board member to vote against the raise and bonus.
In response to questions about Mr. Chiang's vote, spokesman John Wark referred to his statement that "since her appointment in June 2016, Marcie Frost has largely proven her competency as the CEO of the nation's largest pension fund, and I have submitted extensive performance evaluations that reflect my favorable opinion of her."
He added in the statement that although he hopes Ms. Frost will be exonerated, that his fiduciary duty to CalPERS comes first.
However, given recent press reports, Mr. Chiang said in his statement that "I can no longer sit on the sidelines, watching how some have been quick to paint Ms. Frost as an untruthful villain, while others have too casually dismissed what are serious allegations. Both are a rush to judgment."
"The treasurer has made his thoughts and recommendations known to all of his colleagues as well as the CEO," Mr. Wark said.
Board President Priya Mathur responded in a statement that “there is no need for an independent review.”
She said that Ms. Frost is an “extraordinary professional who has distinguished herself throughout her career and, in particular, during her two years leading CalPERS.”
“The board's review this week on all matters regarding her performance sends a clear and unequivocal message that she has delivered for California public-sector workers and retirees,” Ms. Mathur said.
The performance, compensation and talent management committee on Tuesday recommended the board award Ms. Frost the raise and bonus after a more than four hour closed session during which it conducted Ms. Frost's annual performance review, said Bill Slaton, a board trustee and committee chairman.
In a personal comment following the board's vote Wednesday to give Ms. Frost a raise and a bonus, Mr. Slaton said: "We have a great hire in the CIO (Yu Ben Meng) that's coming on board and the CFO (Michael Cohen) that's coming on board. So I think the committee feels we have the right team here and that we're very excited about our future going forward in serving our members and retirees."
Ms. Frost's recommended bonus was slightly under the target of 27%, according to CalPERS' most recent executive compensation policy. The committee could have given Ms. Frost a bonus of up to 40% of base pay, according to the policy.
The CEO's maximum pay range is $224,000 to $352,800, under the current policy.
There was no discussion during the committee's open meeting concerning the current controversy surrounding inaccurate representations in a news release and candidate memorandum when Ms. Frost was hired, which said she was working on a dual bachelor's and master's degree. Ms. Frost was enrolled but did not complete a program at Evergreen State College that awards units toward a bachelor's degree based on experience.
"So, I know that we usually don't have a performance compensation talent management with such a large audience," Mr. Slaton quipped at the start of the open session.
He added that the committee would not be discussing Ms. Frost's performance. "In closed session we spent a long time reviewing all matters regarding Ms. Frost's performance and now in open session we are convening in compliance with our policy regarding personnel matters to discuss compensation only."