STRS Board member Craig Brooks: Summary of remarks preceding 9/18/09 bonus vote

From Craig Brooks, September 19, 2009
Subj: Re: THANK YOU!!!!!!!!!!

Kathie:

Here is a summary of where I was coming from yesterday:

I try to think and act as a shareholder would in my decision making at STRS

Background comments:

1 - I believe the investment staff are professionals who try to do the best they can for the members.

2 - I am a believer in compensating staff competitively, that means the right compensation to attract and retain well qualified personnel.

3 - I am a believer in compensating staff based on performance versus benchmarks.

4 - There has been a lot of comments in the media as well as on blogs and e-mails that STRS has not performed well relative to other Public Pension Funds. Many times the data is not based on similar time frames, let us wait a month or two for the evaluation done by ORSC. It is also important to evaluate performance over several time periods, not just 1 or 2 years.

Setting The Record Straight

There has been many comments relative to the decline in STRS Assets the past 18 months to 21 months. Part of the decline is due to the difference in contributions of approximately $2.4B versus payments in retirement benefits of $4.9B per year. Contributions are growing at 3% per year payments out are growing at 7-10% per year.

My vote

I voted against paying the PBI for this past fiscal year:

1 - I believe the revised system we recommended for this fiscal year was better, which included not paying PSI in years where returns were negative.

2 - I had difficulty paying incentives in a negative return year, when STRS has proposed changing benefit for its members. That said I believe the proposed changes to ORSC were justified.

3 - Although I am an advocate at looking at relative returns over longer periods of time STRS had a negative return of 1.2% versus its benchmark for this past fiscal year.

Kathie, I believe that staff and the board work hard to do the right things! We delibrated long and hard on thr PBI issue as well as long term strategic planning. I was not here when the board had to deal with the legal issues and law suits that came out of shutting down the previous PBI plan, all STRS employees had, other board members were. I am comfortable that as a result of these deliberations we will end up with a better and fair compensation system going forward and a board that takes many views into account.

I do not know if my recommendation was right but I will continue to be an independent thinker.

Thank you and have a nice weekend,

Craig

Kathie Bracy to Craig Brooks and Jim McGreevy, September 18, 2009
Subject: THANK YOU!!!!!!!!!!

Craig and Jim --

I can't thank you enough for having the courage to vote as you did today. Your speeches were ELOQUENT. If you have a copy you'd care to send me for my blog, I'd love to have it. If not, or instead, if you would care to put together some comments I can blog, that would be fine, too. Or none of the above, it's your call.

I could tell you had both deliberated long and hard over the issue of awarding the PBIs, as your explanations were well thought out and both of you were extremely articulate in conveying those thoughts. Thank you, thank you, thank you!! I know you didn't do it to make brownie points with anyone; that was farthest from your mind. And I know it was not an easy decision by any means. In the end you did what you believed was best. That's all you can do. You deserve a good night's sleep after that (and that may be your only "reward"); but know that many people greatly appreciate the courage you showed today.

The outcome of the vote was a huge disappointment, and I dread to think of what future battles we all (and particularly the two of you) may face. Poor Jim -- your very first Board meeting -- but you were well prepared for it; you both were.

Kathie Bracy