Joe Lupo's take on another chaotic STRS Board meeting of 07/19/2024

From Joe Lupo

July 20, 2024

Fiduciary Concerns & Underperformed Benchmarks

Based on yesterday's STRS board meeting, there were postings and commentary by members regarding the definition and application of "fiduciary" as it relates to the board approving PBIs (Performance-Based Incentives, a.k.a bonuses) for the investment staff. And yes, it was important for members to read in order to provide understanding the of the fiduciary responsibility of the board and the members they represent.

Unfortunately, George Vincent, fiduciary counsel, informed the board that it would be a violation of the board's fiduciary duty to eliminate PBIs. Mr. Vincent's opinion is conflicted by not only by being incorrect but also his being employed as a consultant by STRS and possibly his hiring by the State of Ohio and involvement in the investigation of FirstEnergy. Once again, follow the money to connect the dots.

On the subject of underperformance of benchmarks, the question of the day must be are these bonuses based on the investment staff increasing the actual value of investments, or more money lost based based on benchmarks that are calculated using figures and formulas that are accepted and approved without further study and documentation of the performance indicators? Or, as usual and customary, will we be told the bad news after bonuses have already been paid and we will once again just have to live with it?

I am not against bonuses based on warranted performance that merits being rewarded. However, handing out bonuses because that is what has always been done is totally without merit and does not justify the negative impact on the annual actuarial that continues to deny benefits members were promised and deserve.