Top administrators and investment managers at the California Public Employees’ Retirement System were awarded $4.5 million in bonuses, averaging 41% of their base salaries for the year that ended June 30.
The bonuses ranged from a high of 73% of the $240,000 salary of the senior portfolio manager for fixed income to a low of 14% of the $358,280 salary for the senior investment officer in charge of risk management.
The fixed income securities manager, Tom McDonagh, also got the largest bonus measured in total dollars, $212,064, which was pro-rated to cover 14.5 months in the position.
The country’s biggest government pension plan granted bonuses of more than $100,000 each to 16 of 54 managers.
The chief executive, Anne Stausboll, received $96,638, or 34% of her base pay of $283,500. Chief Investment Officer Joseph Dear received a bonus of $84,375, or 19% of his annual pay of $450,000.
The CalPERS board approved the bonuses in a closed-door meeting last month. The information was released Friday. At the same meeting, the board approved salary increases averaging 2% for the current year.
The bonuses came after CalPERS reported a return on investment of 20.7% for the fiscal year that ended in June. It was the best performance in 14 years for the fund, which currently has assets totaling about $218 billion.
“The awards and salary increases are based on long-term performance and the recent success of our fund but also account for the recession and current fiscal environment in our state government,” said CalPERS board President Rob Feckner.
The payments were not excessive compared with those given to portfolio managers and top executives in private sector funds that have hundreds of millions of dollars in assets, said Dan Dunmoyer, a vice president for state government affairs for Farmers/Zurich Insurance and an appointed member of the CalPERS board. “In the private sector, salaries and bonuses for similar performance and similar funds are anywhere from five to 10 times greater.”
The bonuses are provided to management as part of their employment contracts, as long as the executives meet specific performance benchmarks, said Hallye Jordan, a spokeswoman for state Controller John Chiang, a CalPERS board member.
The bonuses are based on rolling averages of returns for the last three years. Similar bonuses for the previous fiscal year totaled $3.3 million and averaged 31% of all recipients’ salaries, CalPERS said. The fund posted an 11.6% return for the 2009-10 fiscal year but lost 23.4% in 2008-09.
Next year’s bonuses are expected to be smaller if returns from the U.S. stock market and other world markets don’t markedly improve in the next eight months.
Things don’t look good in the year ahead for CalPERS. Since June 30, the value of its investments has fallen 8.2%.
CalPERS’ long-term investment goals call for an average annual return of 7.75% to generate enough revenue to meet future obligations to 1.3 million state and local government employees, retirees and their dependents. But Chief Investment Officer Dear recently warned that the fund was unlikely to hit that target over the next few years.