According to an announcement, the Program includes a provision for no incentives being awarded if the STRS Ohio total investment fund has a negative absolute return for the fiscal year (July 1, 2009-June 30, 2010). The board also adopted a motion that said in future years, when the total investment fund returns are negative, no investment staff will receive PBIs, effective with fiscal year 2011 going forward.
In addition, the announcement said if the STRS Ohio total fund earns a positive absolute return but the total market value of investment assets is less than $65 billion by the end of the fiscal year (June 30, 2010), then incentive awards will be reduced by 3% for every $1 billion (and fraction thereof) of the shortfall from $65 billion. For example, if assets on June 30, 2010, are $55 billion, earned PBIs will be reduced by 30%. As of April 30, 2009, total fund assets were approximately $51 billion.
Earned PBIs will be enhanced when the absolute and relative performances are high.
Citing “extraordinary times”, in January the board of the Ohio State Teachers Retirement System announced it voted to suspend bonuses for the system’s investment officers from February through June. After that, the announcement said bonuses will be cut in bad economic times, but enhanced when pension investments do well (see STRS Reneges on Investment Staff Bonuses ).
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