Pension fund chief has bonus after loss
Board says state outperformed indexes, peers
Despite presiding over a $1 billion loss last year, the executive director of the state's pension fund will receive a $64,000 bonus on top of his $322,000 annual salary because the fund outperformed the market indexes and many other major state pension funds.
Michael Travaglini, who is already the highest paid state employee, and his two top aides will get a 20 percent bonus under benchmarks set by the nine-member Pension Reserves Investment Management Board in October. The other 23 members of the management staff will get bonuses of 16 percent.
The bonuses are kicking in as Travaglini is campaigning for salary increases of up to 5 percent for the agency's staff, according to agency documents. But facing questions from the Globe yesterday, the board's chairman, State Treasurer Timothy P. Cahill, pulled the pay increases from the agenda for today's meeting.
The bonuses and the recommended raises come after the $50.6 billion fund registered a 1.8 percent loss for the 12-month period ending June 30, its first loss in five years. The pension board has noted that its investment returns place it among the top tier of public pension funds around the country.
Cahill did not respond to a Globe request for comment. His spokeswoman, Alison Mitchell, would only confirm that the treasurer had pulled the salary proposal from the agenda. Travaglini did not return calls seeking comment.
Alex Aikens, a board member and a Brandeis University adjunct business professor, strongly defended the bonuses, saying Travaglini and his staff can take credit for saving the pension fund from even greater loss because it did far better than the Standard & Poor's index and its peers among other public pension accounts. Aikens voted against the bonus plan last year because he believed the plan did not pay enough.
"If they achieve better results than the indexes and their peer group, then we are doing well and they should be rewarded," Aiken said. "If we have people who beat those returns, the way I see it is that the pensioners have done well."
Aiken declined to comment on the separate pay raise proposal, which seemed to create unusual divisions on the board. For the first time in its history, the four-member subcommittee discussing possible pay increases was deadlocked over the issue. Two members opposed any raises and two others wanted "salary adjustments. . . . across a spectrum of 0-5%," according to the notes accompanying the board agenda that was distributed to members this week.
In an unusual move, the subcommittee asked Travaglini to review the issue. He supported the plan to raise staff salaries by as much as 5 percent.
"Michael Travaglini reviewed the staff evaluations and salary recommendations with the Administration and Audit Committee board members on July 24, 2008," the agenda noted.
In a separate move, the committee's chairman, Robert Brousseau, was scheduled to recommend a salary increase for Travaglini. Brousseau could not be reached yesterday for comment on the scope of the proposed raise or whether it had been pulled from the agenda.
A year ago, Travaglini and the board faced criticism for a bonus plan that would have doubled his salary to well over $600,000 by meeting certain benchmarks.
After a Globe story outlined the plan, Cahill, faced with opposition from Governor Deval Patrick, pulled back the proposal. A scaled-down version was passed in October.
But Cahill lashed out at the governor, a fellow Democrat, accusing him of politicizing the debate over the plan.
In August 2006, Cahill and the board approved a $40,000 raise for Travaglini.
Correction: Because of a reporting error, a story in yesterday's City & Region section about a bonus received by Michael Travaglini, executive director of the state's pension fund, mischaracterized his salary. At $322,000 a year, it is among the highest in the state, but not the highest. 