Divided 5 to 4, the STRS Board of Directors decided against awarding the additional $1.7 million in bonuses that had been promised to the noninvestment staff for work done in the fiscal year that ended in June 2003. This despite the legal opinion of Assistant Attorney General John Patterson, who told the board employees would probably win a lawsuit if they were denied the bonuses because they had been promised to them in written agreements, according to coverage provided by the Cleveland Plain-Dealer.
Patterson’s boss Ohio Attorney General Jim Petro though was not so sure about the definitiveness of a lawsuit victory for the other employees as Petro’s representative on the board was one of the five no votes.
In large part the Board was haunted by incentive payouts of the past. STRS had budgeted for bonus payouts to all staff members last fall. However, the $54 billion pension fund suspended the program after controversy erupted over prior annual bonus payments when it was discovered the fund paid out $14 million in employee bonuses as the fund lost 21% of it value (See Ohio Pension Fund Hit for Lavish Spending Practices ). The imbroglio went all the way to the top and eventually cost former executive director Herb Dyer his job (See Dyer Steps Down From Ohio STRS Post ).
The STRS board has since adopted a less generous bonus program, one that does not include bonuses for the noninvestment staff. YetDyer’s successor,Damon Asbury, said STRS had a legal obligation to pay the bonuses owed under the old system and last week said he would ask the board to approve the bonuses for all staff members (See New STRS Chief Approves Bonuses ).
The Board approved the investment staff bonuses by a margin of 7 to 2. Bonus payments will range from $438 for a junior analyst to nearly $80,000 for the director of fixed income investments, the Plain-Dealer report noted.