30% bonuses for losing the state's money (Jack Bog's Blog)

That's the way Ted Wheeler's "Masters of the Universe" investment advisors roll. Ted Sickinger of the O lays it out:

The investment officers are among the best-paid employees in the state. They earned an average base salary of $162,462 in 2010, plus incentive pay averaging $39,326, or 24 percent of their base salaries. Those incentive payments have proven controversial not only because of their size, but because the investment officers have earned them rain or shine, including years when the pension fund has lost money and the state faces major budget problems....
Investment officers are eligible for bonuses if the five-year average return for the specific fund they manage ranks in the top 45 percent of similar funds managed by other states. The bonuses increase on a sliding scale up to 30 percent of base salary if a manager's performance ranks in the top 15 percent of pension funds with more than $1 billion in assets.

Half of the investment officers earned the full 30 percent maximum in 2010.

But hey, they deserve it, don't they? If we need to cut budgets, guess we'll have to lay off some cops, teachers, public health doctors, and prison guards so that these guys can keep making their big bucks. Without them, the world will end.

We wonder how other states do this. Perhaps the bosses at the O will give Sickinger some rein to take a look around.

Comments (8)

I was watching a fascinating interview the other dau on the OPB Nightly Business Report program a odf some guy who heads a mutual fund, not Vangard or one of ther bif ones and who was yalking about his firm's policy on bonuss for analyists or advisors who pick the investments.

Bonusws there, according to him, uniquely within the industry, are calculated for each eligible person on a running 5 year average of the return. Not on a one year return. And bonuses are reportedly earned only when the return on that employees picks exceeds the somethimg or other 2,000 stock index (Russell 2000? Russel 5,000?) by a certain percentage.

Interesting concept.

Posted by Nonny Mouse | March 30, 2011 9:10 AM

If my memory serves me correctly, it's my understanding that these guys UNDERPERFORMED the S&P 500 and the Dow in 2009-2010. Given it was one of the biggest bull markets in recent times, that's pretty pathetic.

And don't even get me started on the OIC people that have money underwater in sour real estate and hedge fund deals.

Posted by Dave A. | March 30, 2011 9:16 AM

Wheeler should get some points for letting this stuff see the light of day.

Randall Edwards should be doing a perp walk for all the scumbaggery he oversaw.

Posted by Garage Wine | March 30, 2011 9:26 AM

Market returns would be plenty good enough. Market returns without the cost of salaries, bonuses and benefits for the investment "managers", to say nothing of the cost of outside advisers and associated travel and entertainment, would be even better. Market returns are available in — guess what? — the market!

Posted by Allan L. | March 30, 2011 9:34 AM

I like the answer that Wheeler's Deputy Treasurer Darren Bond gave the State Legislative Committee:

"If people want our money, and lots of people want our money..."

He then goes on to use that quote as justification for the $40,000 bonuses. Of course "people want our money", how does that justify on top of paying these folks $180,000 per year, these bonuses? It's automatic that people want our money, who wouldn't? That's there job to hand it out, but damn, get a bonus for doing so when they've cornered the "handout-market"?

These public officials are making me think I'm dumber each day. I wonder if the Legislative Committee is dumber too.

Posted by lw | March 30, 2011 9:35 AM

The best part is the double talk on how they DO make the investment decisions and therefore are eligible for bonuses, but when it comes to accepting perks, they DON'T make them, the OIC board does, and therefore there's no conflict of interest.

Posted by Ex-bartender | March 30, 2011 9:53 AM

Hey, they act just like they were working for the private investment banks.
Bonuses all around, rain or shine!
Government is completely corporatist now, only concerned with itself, the hell with everybody else.

Posted by al m | March 30, 2011 10:21 AM

A $200,000 income puts them in the top 5% of all wage earners in the nation. In other words, WHAT?

And the median household income in Oregon in 2009? $48k. Yes, *household*. Here's an interesting tidbit: in 1980, the median US household income--in 2000 dollars--was about $38k. At current trends, we're on course to match 1980 within the next 5-7 years.

Here's to all those upside-down, overpriced homes on the inner east side of Portland. Guess what's going to happen?

Posted by the other white meat | March 30, 2011 10:49 AM

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Wednesday, March 30, 2011

30% bonuses for losing the state's money

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