MADISON (AP) – Fifty of Wisconsin’s pension fund managers and those who work directly with the state’s investments will receive six-figure bonuses this year because of strong returns, according to figures the investment board released Wednesday.
The board last week approved $13.3 million in bonuses to 143 employees, a 66 percent increase from the $8 million in incentive pay handed out in 2013. Exact amounts for employees were finalized Tuesday and made public Wednesday.
Of the board’s 152 employees, all but nine received bonuses, spokeswoman Vicki Hearing said. One person was not recommended for a bonus and the other eight did not qualify because of either when they were hired or departed the board, Hearing said.
David Villa, the board’s chief investment officer, had the largest bonus at $660,378. That compares with $421,000 he got last year. Michael Williamson, the board’s executive director, was second highest at $648,643 this year. Ron Mensink, a managing director, got the third most at $524,588.
Eighty-eight employees received bonuses of at least $25,000.
The bonuses come at the same time that retired public employees will see their monthly pension payments increase starting next month for the first time after five years of decline caused by losses from the 2008 recession that were spread out over that time.
The bonuses were based on investment performance above market returns over the past five years, the board said in announcing the pay-outs. The board ended 2013 beating one-, three- and five-year performance benchmarks.
The board manages more than $104 billion in assets, most of which is in the Wisconsin Retirement System, which has more than 590,000 participants, roughly 180,000 of whom are retired. Over the past five years, investment performance above market returns has added $2.65 billion to the retirement system, the board said.
Last year the core fund, a diversified group of investments that all 180,000 retirees have some money in, had a 13.6 percent return, beating the benchmark of 12.9 percent. The more volatile variable fund, which has higher risk and about 40,000 investors, had a 29 percent return. That was just above the 28 percent performance benchmark.
In 2012, the bonuses were $4.3 million, a third of what they were this year. That was after investments in the core fund increased just 1.4 percent and the variable fund dropped by 3 percent.
“Incentive compensation must be earned,” the board said in a release. “The plan rewards higher performing staff only when they add value to the trust funds.”
The board’s pay-performance plan has allowed it to hire and retain well-trained staff and dedicated experts needed to maintain the system and manage risk, the statement said.
“SWIB is a large, complex, sophisticated defined benefit investment organization that adds value at a low cost for participants and taxpayers,” Williamson said in a statement, adding that money managers are out-performing market returns at a cost much less than outside managers would charge.
The current compensation plan is competitive with the private sector, but well below what is paid east and west coast money managers, the board said.