The California Public Employees’ Retirement System, the largest U.S. public pension, doubled bonuses to its staff as the $277 billion fund recouped losses suffered in the recession.
Calpers, as the fund is known, said it paid 130 employees and executives $7.7 million in bonuses last year, more than twice the $3.6 million in the previous year. Chief Investment Officer Joe Dear got $321,750 in addition to his half-million dollar base pay. Three investment officers were paid more than $200,000 each, according to data provided by the fund.
The bonuses, based on three-year investment returns, signal that public-pension funds are recovering from the 18-month recession that ended in June 2009, which wiped out a third of Calpers’ value. Still, the crisis left U.S. pensions short more than an estimated $1 trillion needed to cover benefits promised to government workers. Taxpayers have been asked to make up the shortfall.
The California fund says it must grant bonuses to help compete with the pay that employees could make if they went to work on Wall Street. Calpers for the past three years exceeded its benchmark by 0.43 percent, the first time since the financial crisis began in 2007, said Brad Pacheco, a spokesman.
The total Wall Street bonus pool rose 8 percent in 2012, with employees taking home an average of almost $121,900, according to February estimates by New York Comptroller Thomas DiNapoli.
Calpers has long opposed excessive compensation for corporate executives at companies in which it invests. Last month, it voted its 12.3 million shares of Oracle Corp. against the pay packages of Chief Executive Officer Larry Ellison and other top managers.
Ellison, 69, is worth $38.8 billion and ranks eighth on the Bloomberg Billionaires Index. He was the highest-paid CEO in the U.S. this year, data compiled by Bloomberg show. His pay package declined 18 percent to $78.4 million for fiscal 2013 after he gave up an annual bonus and the company missed profit targets.
Three executives outside the Calpers investment office were paid a total of $221,805 in bonuses last year, the fund said. Anne Stausboll, chief executive officer, was paid a $99,547 bonus. Chief Actuary Alan Milligan earned $75,198 and Chief Financial Officer Cheryl Eason was paid $47,060.
Pacheco said spending money on in-house investment management saves about $100 million a year that otherwise would be paid to Wall Street in fees. Calpers spent $44 million last year on compensation and benefits for investment staff, compared with $1.2 billion on external managers.
Governor Jerry Brown, who as of Dec. 1 will make $173,000 a year, signed a law in 2012 overhauling public pensions and reducing costs by an estimated $55 billion over 30 years.
The California State Teachers’ Retirement System, the second-biggest public pension, with $172 billion under management, paid its chief executive officer Jack Ehnes a $134,400 bonus, about 43 percent of what was allowed, according to a compensation committee document. The fund’s Chief Investment Officer Christopher Ailman earned a $133,773 bonus, or about 37 percent of what was allowed.
Calstrs, which paid a total of $1.9 million in bonuses, earned 13.8 percent on its investments in the fiscal year that ended June 30, 1.8 percent the previous year and 23.1 percent the year earlier.
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