Mario Iacone: Bonus Reform

From Mario Iacone, June 9, 2009

Dennis Leone has opened the door to STRS Bonus Reform. No Bonus for Net Negative Return.

Furthermore, Dennis was able to set a clear target (benchmark), 65 Billion. I believe I speak for all of us when I say that we were tired of hearing about Wall Street type benchmarks that only the financial people understand and pay bonuses when you make little or even lose money.

Dennis has opened the door, now we have to step in and finish the job. The new bonus progam provides substantial reform, and only a little more needs to be accomplished. If massive support is provided, perhaps he can obtain further reform before he retires.

Additional Bonus Reforms,

· Gain at least 8% to qualify for a bonus.

· If Last Year’s Gain is lost next year, no bonus until that loss is recovered plus 8%. This parameter is not intended as punishment for a loss. It is intended to force money managers to exercise good Risk Management so they do their best to avoid and/or limit losses and protect profit.

· Set up the bonus structure so that an investment manager does not have the temptation to take unnecessary risks and lose our money in an attempt to increase his numbers to qualify for a bonus.

None of us want to deprive STRS staff of well deserved bonuses, but the key phrase is WELL DESERVED.

And, please do not forget the situation with the 2009 bonuses.

4. Motion by Dennis Leone: to deny FY 2009 bonuses; motion died, due to lack of a second. This means between now and September the Board will have to vote on the actual payments for the 7/12 FY 2009 bonuses.