Dennis Leone: $315,000 head hunter fee too high when many retirees are struggling to make ends meet

From Dennis Leone, August 26, 2006

Hi Barb --

Damon presented the same reasoning at the meeting. You have asked me for my reaction. My points are the same I presented at the STRS Board meeting, which are:

1. At a time when so many retirees are struggling to make ends meet, the $315,000 head hunter fee is just too darn high. There seems to be no amount that the staff and my fellow board members feels is too high for ANY vendor contract. In fact, often my fellow board members don't even know how much the contract is. Probing into that, in the eyes of Fisher and Meyers, is being "intrusive." and "micromanaging." What if the amount is $415,000, or $515,000, or $615,000? When does it get too high? Ever?

2. At the Board meeting, when the staff said they tried to find acceptable people and they could not. My response was: "Try again." I guess as a teacher, you should not be expected to try again if your students don't do as well as they should on the proficiency exam. The staff and the board never seem willing to believe that maybe there are less expensive ways to do things. I recall that when STRS lost $12 billion in the stock market between 2000 and 2002, not one STRS employee received a salary freeze -- not one. It was felt by the executives directors (2 of them) and the full board (9 of them) that this was too risky -- that it might result in someone getting upset and leaving. Oh, really. Well, I am a board member now, and it's my right to believe (based on experiences I had over the past 23 years hiring vendors, contractors, and consultants) that sometimes the amount requested to just too darn high, and sometimes we just have to try again.

3. I would not have voted yes on a staff request to hire 3 additional real estate employees if I knew that 2 months later, I'd be told that another $315,000 would be needed to hire them.

My take, at your request.

Dennis Leone
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From Barb Garwood, August 26, 2006
Subject: Fwd: hiring procedures/personnel

Hi Dennis,

I thought you might like to read Dr. Asbury's response to my question about HR personnel. which I posed while objecting to the $315k authorized to hire head hunters for real estate investment staff. As always, Damon presents an objective, thorough reasoning for the expenditure. I'd be interested in your interpretation of his response to me.

Barb Garwood