CalPERS names investment boss
The head of the Washington State Investment Board is heading south to Sacramento to oversee investments at the nation’s largest public pension fund, the California Public Employees’ Retirement System.
As chief investment officer, Joseph A. Dear, 57, faces the challenge of reversing steep losses inflicted by the financial downturn on the $178-billion fund, known as CalPERS. CalPERS’ portfolio, which includes stocks, bonds, real estate, hedge funds and commodities, has dropped in value by about 25% since July 1.
If the losses don’t stop, taxpayers could be forced to pick up part of the tab for providing retiree and health benefits for more than 1.3 million people.
California Treasurer Bill Lockyer, who serves on the CalPERS board and participated in the selection process, said he was impressed by Dear’s “academic” demeanor and his experience both in managing a pension fund and in developing a winning investment strategy.
“He’s got a combination of investment experience with a wide range of investments” and “a vision about the role of public pension funds and the ways in which they contribute to our society,” Lockyer said. “He’s got specific strategies for troubled economic times . . . and a demonstrated ability to lead.”
In Washington state, Dear has overseen the investment portfolios of 38 retirement funds, public university endowments and government industrial funds since 2002. He also is currently the chairman of the Council of Institutional Investors in Washington, D.C., which advocates on behalf of public, labor union and corporate pension funds.
Dear supervised a staff of 23 investment professionals in Washington state. He will be in charge of more than 220 at CalPERS.
As with CalPERS and most institutional investors, Washington state’s public investment fund has been battered in the last year. Total assets as of Dec. 31 were $67.6 billion, down 9.2% from $74.5 billion on Sept. 30. The fund’s pension investments, the bulk of its holdings, posted strong annual earnings ranging between 16.7% and 21.3% from 2004 to 2007, but lost money in 2008.
Dear, in a CalPERS news release, said he was “tremendously excited by the challenges and opportunities that lie ahead.”
His annual salary at the larger California fund will be $425,000, plus a possible bonus of up to 75% of his base salary. In Washington state, he earned $223,100 a year.
Dear has an extensive background in public administration and government. He has far less specialized experience as an investor in either the public or private sector.
From 1997 to 2001 he was chief of staff to Washington Gov. Gary Locke. From 1993 to 1997 he was assistant secretary for occupational health and safety at the U.S. Department of Labor. He served earlier in a similar position in Washington state government.
Dear replaces Russell Read, a veteran private sector investment officer who left CalPERS in June to manage an environmental and green-technology investment fund in New England.
Not coming from a purely investment background “is a plus” for Dear in today’s bleak environment, said Richard Koppes, a former CalPERS general counsel with the Jones-Day law firm, who advises institutional investors on corporate governance issues.
Dear is a “consensus builder” who should get along well with CalPERS’ new chief executive, Anne Stausboll, and the board, Koppes said.
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