From the NBC Story https://www.nbcnews.com/news/us-news/nations-largest-public-pension-fund-plagued-secrecy-underperformance-p-rcna346330

• The fund’s staffers receive “excessive compensation” despite its dismal performance. Four executives make more than $1 million a year, another four more than $900,000 and 26 earn between $500,000 and $900,000.

From the new groundbreaking CalPERS report and NBC report    .     CALPERS CEO Marcie Frost made $1.4mm despite not having a college degree and is one of 8 making over $900,000 a year.  There are 34 making over $500,000 a year and 86 making over $300,000 a year.  This is not only an insult to taxpayers and government employees but is so excessive it might endanger the tax status of the plan.  These salaries are so excessive that even a mid-level investment employee, the Managing Investment Director of ESG, was singled out in a recentoversight letter from the U.S. House Committee on Education and the Workforce to officials at CalPERS for making $624,024 as one of the factors in challenging the tax status of the plan.  https://edworkforce.house.gov/uploadedfiles/02.12.26_calpers_loss_oversight_letter_will_instructions.pdf

Excessive Staff Compensation Driven by Bogus Benchmarks

CalPERS appears to have some of the highest public pension investment staff salaries in the nation, as well as the highest investment performance bonuses. Given that investment performance is dismal, the lavish bonuses awarded to pension staff seem especially unwarranted. Bogus benchmarks drive this excessive compensation.  See report https://www.nakedcapitalism.com/2021/08/calpers-comes-dead-last-of-34-public-pension-returns-despite-having-biggest-best-paid-investment-office.html

Compensation levels at CalPERS now extend far beyond the norms of public administration. The Governor of California earns approximately $234,000 annually, yet dozens of CalPERS employees earn multiples of that amount. CEO compensation increased from roughly $406,000 in 2018 to more than $1.24 million in 2024, an increase of more than 200 percent—far outpacing the wage growth of the public workers whose retirement security the fund exists to protect.

These excessive compensation levels are justified through a performance measurement system that is largely internally constructed and consultant-validated rather than independently verified against investable alternatives.  In 2022, Naked Capitalism wrote, “… Global Governance Advisors is enabling the giant pension fund’s staff in misappropriating from beneficiaries via the device of fundamentally and pervasively flawed pay benchmarking. https://www.nakedcapitalism.com/2022/04/calpers-consultant-global-governance-advisors-recommends-further-overpaying-grossly-underperforming-calpers-staff.html

Executive incentives rely heavily on CalPERS’ custom policy benchmarks and discretionary organizational metrics rather than direct comparison to transparent market benchmarks. As a result, compensation can rise even during periods marked by leadership instability, governance controversy, and poor investment performance.

Governance concerns are further illustrated by a series of leadership controversies and oversight failures. These include unresolved questions regarding executive credentials, resume exaggeration by senior officers, legal conflicts in hiring processes, and repeated turnover in the Chief Investment Officer role.   Horrible turnover with Sr. Execs still existed despite the excessive pay and is well documented in Naked Capitalism.  https://www.nakedcapitalism.com/2021/01/calpers-making-it-impossible-to-hire-competent-chief-investment-officer.html   https://www.nakedcapitalism.com/2020/08/calpers-chief-investment-officer-ben-meng-made-false-felonious-financial-disclosure-report-more-proof-of-lack-of-compliance-under-marcie-frost.html    

https://www.nakedcapitalism.com/2021/08/exposed-how-calpers-tried-and-continues-to-try-to-cover-up-former-chief-investment-officer-ben-mengs-misconduct.html

https://www.nakedcapitalism.com/2021/03/former-board-member-jj-jelincic-sues-calpers-over-illegal-secret-board-discussion-after-cio-ben-mengs-abrupt-departure-and-hiding-of-records-related-to-583-million-overstatement-of-real-estate-asse.html

^[1] https://www.nakedcapitalism.com/2023/09/calpers-chief-investment-officer-nicole-musicco-resigns-abruptly-intensifying-calpers-senior-staffing-instability.html     https://www.nakedcapitalism.com/2018/08/los-angeles-times-slams-calpers-vetting-failures-resulting-exodus-cfo-asubonten-resume-misrepresentations-doubts-whether-ceo-marcie-frost-made-needed-changes.html

Compensation advisor GCA benchmarks CalPERS executives against private-sector investment professionals, despite fundamental differences in risk exposure, compensation volatility, and personal capital at risk inflating compensation bands while requiring no performance accountability.  

In short, CalPERS pays higher than private sector salaries for investment performance that would result in termination in the private sector. An independent Inspector General would fundamentally alter the structure in which salaries are justified, evaluate the relationship between compensation escalation and measurable long-term net performance, as well as recommend claw back or deferral structures tied to realized economic outcomes rather than interim marks.