CalPERS, CalSTRS Continue Money Manager Bonuses

April 20, 2009 ( - Two of the nation's largest public pension plans have awarded their money managers incentive bonuses.

A Sacramento Bee news report said both the California Public Employees’ Retirement System (CalPERS) and the California State Teachers’ Retirement System (CalSTRS) have handed out sizable bonus checks to their investment staff. The CalPERS and CalSTRS boards approve their respective funds’ bonus plans, which include payments to employees that compare their investment performance to designated benchmarks.

According to the Bee, CalPERS paid about $4 million in incentive bonuses to 58 investment employees in August. The biggest award, $224,171, went to Senior Investment Officer Leon Shahinian and the second biggest to former CIO Russell Read who received a $208,677 bonus to his $555,360 base before stepping down from his post in June.

Anne Stausboll became the fund’s chief executive after receiving a $106,633 bonus for her interim work as Read’s replacement, the newspaper said.

Meanwhile, CalSTRS, the nation’s second-largest public pension fund awarded $2.9 million in bonuses to 35 employees including Christopher Ailman, chief investment officer ($322,953 on base pay of $330,000), CEO Jack Ehnes ($205,000) and Real Estate Investment Director Mike DiRe ($164,731).

Both funds expect to cut more bonus checks this summer. Fund officials say bonuses like those paid to Ailman and Read help attract and retain top talent and are cheaper than hiring outside help to manage investments.

A similar practice in Missouri drew some controversy earlier this month (see MO Governor Unhappy about Retirement System Bonuses ). On the other hand, Ohio suspended its bonus program and decided to adjust bonuses during bad economic times (see STRS Reneges on Investment Staff Bonuses ).