CalPERS aligns performance pay with new allocation strategy

CalPERS is set to change its benchmarks for measuring performance compensation for senior investment staff so they are consistent with recent changes to its strategic asset allocation.Earlier in the year CalPERS introduced a range of new benchmarks, including composite benchmarks for the new asset classes. The proposed performance plan will align with these benchmark changes.

The restructure of asset classes resulted in assets being classified in five main groupings: growth, income, inflation, real assets and liquidity.

Some of the key performance changes reflect CalPERS’ economic outlook for likely returns in the coming year, with infrastructure performance benchmark changed from CPI plus 5 per cent to CPI.

AIM (private equity) moved to a global public markets-based benchmark to better align with global equity and total fund policy benchmark.

In forestland the benchmark for measuring performance was changed to NCREIF Timberland.

Performance plans will also take into account both quantitative and qualitative measures.

Sponsored Content

Chief investment officer, Joe Dear (pictured), will have 70 per cent of his performance compensation in quantitative measures, calculated on a sliding scale of performance above a series of basis points hurdles for the total fund.

Of his performance remuneration, 20 per cent will depend on qualitative factors such as leadership, succession planning, risk management and teamwork.

The remaining 10 per cent will be decided by performance in enterprise-wide initiatives during the fiscal year.

The board will review the new performance measures at its May 17 meeting.  A second board level review is set for June to further refine certain benchmarks and incentive schedules.

Leave a Comment

Sort content by

European funds start rebalancing process

Pension funds in Europe are rebalancing their portfolios to reflect huge falls in equity markets as the financial crisis forces them to re-evaluate the relevance of their strategic asset allocation in the new market environment. mrec4inarticleinline Sponsored Content scnative1 scnative2 scnative3

European asset allocators fall short of academic best practice

Investment managers in Europe fail to employ techniques that avoid generating overly-concentrated portfolios because of poor input estimation, and do not fully take into account extreme risks when constructing portfolios, according to research by the EDHEC Risk and Management Research Centre. mrec4inarticleinline Sponsored Content scnative1 scnative2 scnative3

…as Government quantitative measures push up liabilities

Quantitative easing measures introduced by the UK’s Bank of England aimed at kick-starting the local economy have had the unintended consequence of pushing up UK pension scheme liabilities. mrec4inarticleinline Sponsored Content scnative1 scnative2 scnative3

New Jersey winds back alternatives program

The $59 billion New Jersey Division of Investment, has made several changes to its alternatives investment portfolio including a slowdown in new commitments, on the back of a belief that large institutions with high allocations to alternatives will be forced to sell portions of their portfolios in order to raise liquidity and rebalance their overall

Record losses for UK DB plans underscored by reliance on markets…

Five consecutive days leading into March were the most volatile on record for UK final salary pension schemes since accounting standards were changed in 2001, reflecting the risks associated with funding dependence on investment markets. mrec4inarticleinline Sponsored Content scnative1 scnative2 scnative3

Private equity NAVs to fall further, but 80% discounts are unjustified

While the net asset values (NAVs) of private equity funds have been spared the steep declines taken by major indexes, the reporting lags inherent in private equity fund valuations should unveil double-digit losses for the first half of 2009. mrec4inarticleinline Sponsored Content scnative1 scnative2 scnative3

Previous