The Boston Globe reports that Travaglini said ongoing efforts by legislators to limit a performance-based bonus system that he helped create three years ago was an important factor in his decision to leave effective June 11 and go to work for a Chicago investment firm.
Travaglini earns a base salary of $322,000 and can make as much as 40% more as a bonus, based on the performance of the pension fund, the news report said. Other employees managing the pension can earn bonuses ranging from 30% to 40%.
Travaglini said two legislative proposals would make it harder to attract and retain talent to run the state’s $37 billion pension fund. One would limit the ability of state workers to earn more than the governor, who is paid $143,000 a year, and another would block bonuses for years in which the pension fund lost money, regardless of its relative performance.
“Someone else can hang around for that, but it’s not going to be Mike Travaglini,” he said, according to the Globe. “Most people will say, `Good riddance. If you want to make more money go do it in the private sector,’ and that’s what I’m going to do. But there’s a real threat to not being able to recruit and retain competent people here.”
Travaglini also cited campaign ads financed by the Republican Governor’s Association aimed at Timothy Cahill, the state treasurer and gubernatorial candidate who serves as chairman of the Pension Reserves Investment Management board, that say the state paid out performance bonuses when the pension fund lost billions in 2008. The bonuses, paid in September 2008, were based on the pension fund’s investment performance for the prior three years, when the fund was performing well, and Travaglini earned a bonus of $64,000 that year.
Bonuses paid to public pension fund staff following the market collapse faced much criticism last year (see Public Fund Incentives Draw Fire, Focus).
Travaglini, will join Grosvenor Capital Management as a managing director for business development. His new job will involve pitching Grosvenor’s hedge fund investments to public pension funds, the newspaper noted.