LP Briefs, August 2011

Do You Know Joe Dear’s Salary at CalPERS?

The buttons have been hot in California during the frustratingly slow economic recovery, especially on the issue of public pensioners getting more than $100,000 per year in retirement.

Even though six-digit pensions go to about 2% of California public sector retirees, the feeling from some is that those working for the state should not get large pensions, or salaries, no matter what talents or responsibilities they bring to their jobs.

But what about the guy who manages the $232 billion pension fund? Joe Dear, who oversees investments for the California Public Employees’ Retirement System, was paid $548,142 in 2010, according to new salary disclosures released in July by John Chiang, comptroller of California.

That made Dear the sixth highest-paid person on the California payroll. Dear’s 2010 salary would greatly exceed that of Gov. Jerry Brown, who will earn $173,986 in 2011, according to the California Citizens Compensation Commission. That, by the way, makes Brown the seventh-highest paid governor in the country. (Former Gov. Arnold Schwarzenegger opted to not accept a salary in 2010.)

But CalPERS is one of the largest and most complex pools of money in the world, with a hand in nearly every kind of investment, from infrastructure to stakes in non-public companies, from venture capital to real estate and hedge funds. Moreover, this state pension has the largest pool of private equity investments in the world, with a $49 billion private equity program, including more than $33 billion in invested capital.

Dear was hired in 2009 with a base salary of $425,000, according to press reports at the time. In addition to his base salary, he could earn a performance bonus that maxes out at 75% of his base salary ($318,750). That much he didn’t earn in 2010. As of April 30, CalPERS reported a one-year return of about 15 percent.

Brad Pacheco, a spokesman for CalPERS, told the Associated Press with some understatement that Dear earned less than what an experienced manager could earn in the private sector. That private sector, of course, includes many private equity billionaires, some of whom have had a habit of late of buying professional sports teams.

Joe Dear, who oversees investments for the California Public Employees’ Retirement System, was paid $548,142 in 2010.

—Gregory Roth

Stanford CIO Splits

With the unexpected exit of Ken Frier, Stanford Management Co.’s CIO, after less than a year in the job, the university has not yet revealed how the departure would affect the management of the school’s $13.8 billion endowment, the nation’s fourth largest.

About 12% of Stanford’s endowment is allocated to private equity and venture capital, a portion that would amount to about $1.7 billion. Dow Jones reported that the venture-heavy endowment has investments with Greylock Partners, Highland Capital Partners and Oak Investment Partners. Its private equity holdings include Oak Hill Capital Partners and China’s Hony Capital.

Stanford spokeswoman Lisa Lapin said the endowment was “back to the status quo,” and that John Powers, the CEO of Stanford Management Co., would remain in “day-to-day operational control.” She said she was unable to say whether Stanford planned to replace Frier or whether it planned to install an interim investment chief.

Frier came to Stanford in August 2010 and was the first to occupy the chief investment officer role since Eric Upin left in 2008 to join Sequoia Capital. Prior to becoming Stanford’s CIO, Frier had been at Hewlett-Packard for a decade, where he was lauded for helping steer the company’s pension assets out of equities in 2007, just prior to the market’s tailspin.

Powers did not return phone calls seeking to find out why Frier departed. Frier also could not be reached.

Frier was a graduate of Stanford Business School and said in his hiring announcement last year that he was “thrilled to be returning to Stanford and eager to make a contribution to the success of the endowment.”

—Gregory Roth