Hearty’s scheduled last day on Friday does not come unexpectedly since he said he would voluntarily resign when a successor was hired after state Treasurer Timothy Cahill’s ouster attempt in October, according to The Boston Globe. Cahill, who serves as chairman of the $32-billion pension fund, eventually lost his effort to replace him with a hand-picked candidate.
Hearty confirmed on Monday that he would be leaving for a job in the private sector, but wouldn’t disclose details. His departure, after three years, comes as a pension fund search committee and the headhunting firm Russell Reynolds Associates are talking to three finalists for the post, which is among the highest-paying jobs in state government. Hearty pulled in $212,000 last year.
Cahill said the pension panel may be ready to give the nod to Hearty’s permanent replacement in about a month. In the meantime, Cahill said he would propose the board tap the fund’s chief financial officer, Karen Gershman, interim executive director.
Hearty was in charge of the pension agency during some of the highest and lowest moments in its 20-year history. A top fiscal aide in the administration of former Governor William Weld, Hearty took over the executive director’s job in early 2001, when the bear market was still a cub. The state fund posted its worst year ever in 2002, booking an 8.9% loss, but then rebounded in 2003, notching its highest returns ever with a 26.42% gain.
In August, Cahill surprised Hearty and others in local financial circles when he said he had the votes on the board to dump Hearty, 51, and replace him with Steven Weddle, a little-known investment banker who spent the last decade investing in start-ups and economic development projects in southern Africa (See MA Pension Executive Hit With Sudden Ouster ).
Cahill’s move sparked a backlash, as Hearty was popular and respected in the financial community. Prior to becoming pension fund director, Hearty had been a financial executive at Wall Street firms, and also served as a member of the pension board for a decade. The resulting imbroglio led to the resignation under protest of Jack Meyer, head of Harvard University’s $19 billion endowment fund, and MIT Treasurer Allan Bufferd.
Governor Mitt Romney also weighed in, asserting that Cahill was treating the pension agency as a private political fiefdom and questioning Weddle’s qualifications for the position (See Mass. Governor Balks At PRIM Executive Director Replacement Plan ). With support crumbling, Weddle withdrew his candidacy in early October, and Cahill agreed to let the board run an open search for a new executive director.