Local Politics

Treasurer suspends bonuses for pension managers

Posted June 1, 2009 6:32 p.m. EDT
Updated June 1, 2009 7:13 p.m. EDT

— State Treasurer Janet Cowell said Monday that her office won't dole out bonuses to pension fund managers for the 2008-09 fiscal year because of a tight state budget.

The move follows similar action last week by the Office of the Commissioner of Banks. The banking office drew legislative fire over $500,000 in bonuses handed out last August and planned to reward top employees again this year with $200,000 in bonuses.

Lawmakers are trying to slash more than $4 billion from the 2009-11 budget because of dwindling sales and income tax revenue.

Last summer, the General Assembly turned salary discretion in the State Treasurer's Office over to former Treasurer Richard Moore, who promptly gave hefty raises to his top investment advisers.

The salary for Chief Investment Officer Patricia Gerrick was doubled, from nearly $167,900 a year to $340,000. Investment directors Jeff Smith and Susan Carter each saw their salaries jump from $109,000 a year to $210,000.

State officials argued that all three were earning less than the national average for public pension fund managers before their raises. South Carolina and Virginia, for example, pay their chief investment officers $280,000 a year and their investment directors $230,000.

Moore also awarded Gerrick a $51,746 performance bonus last October on top of her raise. Smith and Carter weren't eligible for bonuses before this year.

North Carolina's pension funds lost $17 billion – almost 20 percent of their value – in the stock market meltdown. The funds lost another $4.1 billion in the first three months of this year.

Mark Dearmon, a media production specialist at North Carolina State University, has paid into the state pension system for 30 years. He said he wants pension managers compensated properly, but he doesn't support additional bonuses.

"I want the best people down here that we can get to manage our money," Dearmon said. "(But) there are lots of good state employees out there that could get a bonus if it was available to them just because of excellent performance."

Cowell, who was elected in November, said she stands by the raises for the pension managers.

"These individuals we're talking about do safeguard the livelihood of retirement for 800,000-plus people," she said. "These are individuals that make a difference in everybody's lives and deserve to be compensated at a market-competitive rate."

But she said no one in her office would receive a bonus this fall.

"I will not defend paying out bonuses in a year like this year," she said, adding that she hopes to award bonuses again when the budget crisis ends.