The board of the state pension fund voted Tuesday 5-to-4 to approve a new compensation plan that would raise potential bonuses for investment staff.
State treasurer Steve Grossman, who is chairman of the $50 billion pension board, voted against the plan because it lacked a key provision he supported. Grossman had pushed for bonuses to be linked to the fund’s 8 percent annual return goal; in years when the fund doesn’t hit that threshold, the ultimate bill to taxpayers increases.
Grossman did win on a different matter, requiring that bonuses be deferred in years when the fund outperforms the market but still loses money.
“I’m not comfortable paying bonuses after a down year,” he said.
Others on the board agreed--with some, including Governor Deval Patrick’s representative, voting against pay increasing at the pension board at a time when other state employees could face cuts.
Michael Trotsky, the fund’s executive director and investment chief, thanked the board and compensation committee for giving him the tools to hire the best and brightest.
“The smartest people in the world work on Wall Street, and I need similar people here,” he said.
Trotsky further said that the “real money” to be saved in the pension board’s $300 million budget is with hedge funds and consultants, not in bonuses for staff.
“I want to save $100 million,” Trotsky said. “I need talented people to be able to replace Wall Street salaries.”Beth Healy can be reached at email@example.com.