The investor approval rate for say-on-pay votes on executive pay has consistently been above 90 percent each year since the practice was implemented, and some have viewed that as proof that shareholders generally approve of the compensation their top executives receive. A simple experiment to find this topic in 150 million textbooks, including seminal books by William Bernstein, David Swensen, Bob Litterman, Grinold and Kahn, has nothing TFM or total portfolio management. The 2019-20 fiscal year return brings fund performance to an average annual return of 6.3% over five years, 8.5% for over a 10-year time horizon and 5.5% over a 20-year period. It might be a good idea to set up meetings to discuss compensation with large shareholders, just to see what people are thinking about the effects of Covid-19 on the marketplace and how that should affect compensation. One Director Says: “Try Harder”, Sign Up to Receive Chief Executive Magazine, CEO Optimism For 2021 Plateaus In October Amid Contentious Election And Covid Uncertainty. ** This estimate is based on a 7% discount rate. It is mandatory to procure user consent prior to running these cookies on your website. CDPQ Appoints a New Head of Liquid Markets. In recent years it’s been proven that many female and minority workers have been underpaid for years, so arguing for higher pay for top executives that aren’t paying employees fairly will likely receive backlash. Since shareholders typically approve more than 90 percent of the say-on-pay votes each year, CalPERS appears to be urging boards to take a closer look at the compensation models they are using. Communications & Stakeholder Relations The S&P 500 gained 0.3% to close at 3,465.39 and the Nasdaq Composite closed 0.4% higher at 11,548.28. During the 2020 proxy season, CalPERS voted against 2,716 directors who sat on board compensation committees because the institutional investor felt the executive compensation plans put forth didn’t accurately reflect the performance of the company. For more than eight decades, CalPERS has built retirement and health security for state, school, and public agency members who invest their lifework in public service. Necessary cookies are absolutely essential for the website to function properly. Call to Order and Roll Call (PDF) Approval of the June 15, 2020 Investment Committee Timed Agenda (PDF) (916) 795-3991 -, SACRAMENTO, Calif. – CalPERS today reported a preliminary 4.7% net return on investments for the 12-month period that ended June 30, 2020. The preliminary 4.7% return topped the fiscal year total fund benchmark of 4.33%.*. CalPERS has already grown frustrated with the situation and is voting against directors on compensation committees. This May, all CalPERS retirees who retired in 2018 or earlier will receive an increase to their cost-of-living adjustment (COLA).This is a result of the Consumer Price Index for All Urban Consumers (1967 = 100) increasing by 1.81% from 2018 to 2019. Pensions' Love-Hate Relationship With Private Debt? Individual asset class returns included Fixed Income, which generated a 12.5% net return, followed by Real Assets and Public Equity net returns of 4.6% and 0.6%, respectively. Private equity has been CalPERS’ highest returning asset class, with 10-year annual returns of 10.4% and 20-year annual returns averaging 7.5%. I’m proud that our strategy enabled us to navigate volatile markets and end the fiscal year on a strong note. Over the next seven weeks, each Thursday we will bring you a new installment. “No doubt significant uncertainty still remains, but with our focus on investing over many years we firmly believe that private equity will help us generate the returns we need to pay retirement benefits.”. View the Total Fund and Benchmark Performance Calculation – Wilshire Associates (PDF)*** for more information. Chief Executive’s publications are designed to help CEOs do their jobs better and run their businesses more effectively. A free paper copy of the information available on the website can be obtained by contacting: Boards should be on the lookout to see if other investors follow their lead. In a year where well-known companies such as Neiman Marcus, J.C. Penny, 24 Hour Fitness, Lord & Taylor, Hertz, Brooks Brothers, Sizzler USA and others have filed bankruptcy largely due to the pandemic, many shareholders will likely ask, “what do you pay the CEO and board for that?” Those companies that have been battered this year but have survived will likely be asked “How do you justify awarding executive pay increases when the company is laying off employees and losing revenue?” These questions and more will likely confront boards as we move into next year if investors believe they have been presented with pay plans that don’t fully account for the negative financial impacts caused by Covid-19 and other factors. PERSpective provides information for members of the retirement and health programs of the California Public Employees’ Retirement System. If you want additional information about your investment options, you can go to Copyright 2020 California Public Employees' Retirement System (CalPERS) | State of California, Total Fund and Benchmark Performance Calculation – Wilshire Associates (PDF), CalPERS Reports Preliminary 4.7% Investment Return for Fiscal Year 2019-20. Mihail Garchev, former Vice President and Head of Total Fund Management at BCI, and I are launching a new seven part series on Total Fund Management (TFM) on this blog. We also use third-party cookies that help us analyze and understand how you use this website. Better to have these conversations on friendly terms before shareholders confront you. These cookies will be stored in your browser only with your consent. CalPERS 457 Plan September 30, 2020 This document includes important information to help you compare the investment options under your retirement plan. Chief Executive’s October polling of nearly 500 CEOs finds CEOs cautious on the eve of the Presidential election. As executive compensation continues to rise, boards will have to answer that question more and more. OMERS CPO on the Importance of Leadership. The 2019-20 fiscal year return brings total fund performance to 6.3% for the five-year time period, 8.5% for the 10-year time period, and 5.5% for the 20-year time period. © 1 of 11 CalPERS Sharp Performance Plus HMO | 20449 Summary of Benefits and Coverage: What this Plan Covers & What You Pay For Covered Services Coverage Period: 01/01/2020 – 12/31/2020 Sharp Health Plan: CalPERS Sharp Performance Plus HMO Coverage for: TFM is the unwritten chapter in your favorite portfolio management textbook. CalPERS assets at the end of the fiscal year stood at more than $389 billion. Last year, CalPERS reported a preliminary 6.7% total return on investments for its fiscal year ended June 30, when its assets stood at about $370 billion. When it came, we were in a strong position to reduce its impact on our portfolio and take advantage of new opportunities created by the changing economic climate. “What started out as a health crisis turned into an economic crisis and severely affected investors everywhere, including CalPERS,” said Yu (Ben) Meng, CalPERS chief investment officer. Based in New York, he writes about corporate governance and investing topics. CalPERS 457 Deferred Compensation Plan. According to a report from Pensions & Investments, CalPERS voted against 52 percent of the 2,256 say-on-pay votes on executive compensation that were cast as of June 30 this year. The CalPERS go-forward strategy utilizes its structural advantages and includes increasing investments in private assets over several years, and prudently using leverage to take advantage of market opportunities at the appropriate time. “The preliminary returns for private equity reflect the steep drop in economic activity during a period of unprecedented change,” Meng said. Any cookies that may not be particularly necessary for the website to function and is used specifically to collect user personal data via analytics, ads, other embedded contents are termed as non-necessary cookies. July 15, 2020. CPP Investments Updates its Policy on Sustainable ... 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