CalPERS Boosts Pay for Next CIO, CFO

Retirement system hasn’t been attracting enough top talent with current pay package.

In a move aimed at drawing top candidates and competing with other public pension funds, the $352.79 billion California Public Employees’ Retirement System (CalPERS) has voted to increase the compensation package for its next CIO and CFO.

“Right now, this is probably pretty bad timing in terms of looking for a CIO in the marketplace, because three of the top five public fund jobs are open right now,” Andrew Junkin, president of Wilshire Consulting, said at the June 19 meeting of CalPERS’s Performance, Compensation and Talent Management Committee. “New York City is open, New York State is open, CalPERS is open … competition is going to be fierce.”

The CalPERS board voted to revise the CIO salary range to $424,500 to $707,500, with incentives of as much as 150% of that salary.

Current CIO Ted Eliopoulos announced in May that he will be stepping down at the end of the year, and former CFO Charles Asubonten left that same month after questions arose about the accuracy of his resume. According to California state salary records, Eliopoulos earned a base salary of $552,842.90 in 2017, with total compensation of $867,177.90. Meanwhile, Asubonten earned $45,833.34 in salary for the few months he worked in 2017, with total pay and benefits of $120,833.34. The Los Angeles Times reports his annual base salary was $250,000.

“Our compensation is just too low,” Richard Costigan, a member of CalPERS’ board of administration, said in May, according to The Sacramento Bee. “We’re not attracting quality candidates. The quality candidates who want to come here are negatively impacted by the salary levels.”

In 2015, CalPERS’s board of administration launched an executive salary survey, and has been considering boosting the compensation it offers to top executives. The board sought recommendations from consulting firm Grant Thornton on a new compensation range after Eliopoulos announced that he would leave CalPERS.

The incoming CFO will earn as much as $362,500 in base wages, and a bonus worth 40% of the salary, according to the Bee. It said the cap of $507,500 is about $73,000 more than what was available to previous CFOs.

“The Executive and Investment Compensation Program supports the 2017-22 Strategic Plan’s goal to promote a high-performing and diverse workforce by recruiting and empowering a broad range of talents,” said CalPERS in an agenda item during its June 19 board meeting. “The compensation program provides a means for recruiting and retaining highly-skilled executive and investment professionals.”

Although CalPERS is increasing its executive pay package, it’s also making the payment of incentive awards performance-based.

“In the event that total fund for a performance period is negative, and such negative return exceeds the benchmark for the period,” according to the board’s agenda, “then the board will have the discretion to reduce, defer, or eliminate all or a portion of an employee’s incentive award.”

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