Cahill halts plan for bonuses
Accuses governor of playing politics
Faced with gubernatorial opposition yesterday, state Treasurer Timothy P. Cahill temporarily abandoned his plan for a performance-based pay package that could have doubled the state's pension fund manager's income to more than $600,000 a year.
Cahill then took the extraordinary step of lashing out at Governor Deval Patrick, a fellow Democrat, accusing him of politicizing the debate over the controversial plan by publicly opposing it.
The push to raise Michael Travaglini's pay package was expected to be on the agenda of today's nine-member Pension Reserves Investment Management Board, but was apparently removed by Cahill after Patrick voiced opposition to the increase in yesterday's Globe. Cahill chairs the board that oversees the $50 billion public employee pension fund.
"The statement released by Governor Patrick was an attempt to politicize the vote and has made it difficult to discuss this issue in a rational and thoughtful manner," Cahill said in a statement released by his office.
The treasurer, who is in Italy on personal business, is expected to continue to push for the pay package, an aide indicated, although Beacon Hill insiders said yesterday that he may be facing an uphill battle to get a majority support.
The governor, who appoints two members to the board and has a seat that he can assign to a designee, voiced the only public opposition when the Globe reported yesterday that Travaglini, executive director of the pension fund, could double his $322,000 a year salary to well over $600,000 if he reaches certain benchmarks.
Patrick refrained yesterday from hitting back at Cahill. In a statement, his press aide, Kyle Sullivan, said the governor "thought it was important to make his position on the matter public" because he had "serious concern about the process" and the compensation amounts proposed.
Cahill's sharply worded statement is the most serious political breach to erupt between Patrick and a major Democratic figure since his inauguration in January, when the party took control of the governor's office for the first time in 16 years. The only other public conflict came last month when House Speaker Salvatore F. DiMasi, in a far milder tone, criticized what he said was the administration's improper use of state development funds.
Political insiders say much of the breach between Patrick and Cahill stems from the decision last April by Cahill's one time top political consultant, Doug Rubin, to join the governor as his chief of staff. The relationship between Rubin and Cahill has been strained as the two offices grapple over several difficult issues.
Yesterday's public flare-up was sparked when Patrick said the proposal that would raise the pay of Travaglini and other pension managers was "out of alignment with other public pensions officials who have similar duties" and instructed his designee, Leslie Kirwan, the secretary of administration and finance, to vote against the plan.
Patrick made his statement in response to a Globe inquiry. Other board members did not respond to requests, and Cahill refused to state his position, saying that it would not be proper to do so until the public meeting when the vote was scheduled to take place. He cited a 22-year policy by the board to remain publicly mute on issues that are scheduled for board meetings. Neither Cahill nor Travaglini would provide the Globe with a copy of the pay proposal.
Travaglini, who received a $40,000 a year raise last August and is among the highest paid public officials in Massachusetts, had distributed the compensation plan to the board this week. Sources familiar with the plan said it would give Travaglini and other managers a minium 20 percent increase and as much as a 100 percent by meeting certain benchmarks.
Travaglini, as well as those in the investment banking field, have said that public pension plans must offer pay packages to their managers that are competitive with the private sector if they hope to retain talented staff. His plan needed a majority of votes on the nine-member board.
Cahill said the state pension agency, the Massachusetts Pension Reserves Investment Management Board, had used the firm McLagan Partners to develop "a fair and equitable way to reward PRIM employees for the fund's continued performance in the top 1 percent of pension funds nationwide."
"Given the complexity and size of the . . . [pension fund] as well as Governor Patrick's plan to give PRIM oversight of additional municipal pension funds, I am extremely cognizant of the need to keep all PRIM staff as employees, not only the executive director and senior investment staff, but all 23 talented individuals," Cahill said.
The move to create the performance based compensation system for the pension board managers comes as other public pension plans increasingly move to adopt similar incentive or bonus plans.
But performance-based pay that is competitive with private sector investment fund executives often runs into political storms. 