TRST takes a page out of Dr. Leone's playbook?

From John Curry, February 14, 2009

Teacher Retirement System officer forgoes incentive pay

Pension fund employees' bonuses also will be deferred until investment returns improve.

By Kate Alexander
AMERICAN-STATESMAN STAFF
Saturday, February 14, 2009

The chief investment officer of the Teacher Retirement System of Texas will forgo his incentive pay after a burst of legislative outrage over investment bonuses at some state trust funds.

Britt Harris, who oversees the investment of the $81 billion pension fund, offered Friday to give up nearly $168,000 in incentives that would be due to him based on the trust fund's 2008 performance.

In addition, payment of the $2.5 million in incentives due to more than 80 other employees in the investment division will be deferred until the fund generates a positive return, the retirement system Board of Trustees decided in a 6-to-2 vote.

Britt Harris

System policy already delayed all incentive payments until 2010 because the fund balance had declined about 27 percent last year as the economy took a nosedive.

The hasty change to the incentive policy followed a political firestorm earlier this month over bonuses paid at the University of Texas Investment Management Co. that led to the board chairman resigning in protest.

Senate Finance Chairman Steve Ogden, R-Bryan, said he appreciated the move by Harris and the teacher pension fund. But Ogden said his "focus is not on individuals but on the way we compensate our investment managers so that we maximize the returns of the funds."

The incentive deals at the state's endowments and pension funds, all of which took big hits in the market tumult this fall, appear to encourage investment managers to take more risk while taxpayers are ultimately on the hook, Ogden said.

As chief investment officer, Harris said, he should forgo his incentive pay because he must bear a greater responsibility for the fund's recent decline than the other investment employees.

Pension fund board members lauded Harris for his "gracious gesture" even as some tried to turn down his offer.

But others said it was important that the retirement system send the message that the concerns of the state's political leaders have been heard.

"We are going to generate a lot of good will from the Legislature, the governor and the lieutenant governor. And I think that's important," said Mark Henry, a board member and superintendent of the Galena Park Independent School District.