Three of the top employees at the State of Wisconsin Investment Board (SWIB) will each take home a bonus of more than $400,000 this year.
In fact, 43 of SWIB’s money managers, executives and analysts will receive six-figure incentive awards.
That’s part of the combined total of $11.1 million worth of bonuses to SWIB employees for their handling of public employee retirement funds — even though the main fund ended 2015 with a flat return.
SWIB manages about $100 billion in assets, most of which consists of the Wisconsin Retirement System, whose funds provide benefits to more than 588,000 current or former public employees.
Results of the main Core Fund are spread over five years to prevent sharp increases or decreases in retiree pensions.
So while the Core fund ended 2015 with a return of minus-0.4 percent, its five-year return was 6.7 percent, which outdid its 6.2 percent benchmark. Benchmarks are based primarily on stock market index returns.
For the past five years, the Wisconsin Retirement System generated $1.2 billion in investment earnings over its benchmarks, after administrative and operating costs. That’s down from $1.4 billion for the five-year period that ended in 2014.
The total SWIB bonus pot last year was $11.9 million, and the year before, when the retirement funds had five-year investment earnings of $2.65 billion, the bonus allotment was $13.3 million.
This year’s top SWIB award goes to Chuck Carpenter, managing director of private markets, at $468,308. Combined with his salary, that puts Carpenter’s compensation package at $759,808, down slightly from a total of $765,077 last year.
SWIB’s chief investment officer David Villa gets a $441,926 bonus, boosting his total package to $884,426, the highest in the state agency and slightly higher than his total last year of $874,914.
Executive director Michael Williamson will get an incentive award of $378,568, pushing his total compensation to $693,918, compared with a total of $809,260 a year ago.
Dick Kratz, Wisconsin Coalition of Annuitants secretary, whose organizations represents retirees covered by the Wisconsin Retirement System, says he has no problem with the large awards.
“It’s been a very successful system because we’ve retained the people that are doing the investing. They have made lots of money for us,” Kratz said.
“Since the implementation of the compensation plan in 2001, newly hired employees have more credentials and approximately five years more investment experience.
“Three years after implementation, the turnover rate for investment staff has been reduced from 8.7 percent to 4.2 percent,” Kratz said, quoting minutes from a December 2015 coalition meeting.
Villa is one of the top investment officers worldwide, Kratz said. He cited an October 2015 ranking in Sovereign Wealth Quarterly of the “100 most significant and impactfulasset owner and public executives” of 2015 — Villa is ranked 33rd worldwide and eighth in the U.S.
SWIB officials “could be making a whole lot more money on either coast,” Kratz said.
“We are in a war for talent and the incentive compensation plan is working as intended with payments directly tied to performance,” said Williamson, in a written statement. “Spending money on internal staff saves about $63 million a year that otherwise would be paid to external investment managers.”
One-hundred-fifty SWIB employees — all but 10 workers at the agency — will receive a portion of the incentive pot under the plan approved by the board’s trustees Wednesday.