CalPERS lowers level of outperformance CEO needs for incentive pay

CalPERS made some changes to CEO Marcie Frost's incentive plan for fiscal year 2023, including lowering the level of outperformance the $454.8 billion pension fund has to attain for Ms. Frost to get credit toward a maximum payout.

The board of the California Public Employees' Retirement System, Sacramento, on Wednesday, changed one of six metrics used to determine the incentive pay, lowering the required pension plan return outperformance to 10 basis points above the plan's benchmark from 35 basis points for Ms. Frost to be eligible for the maximum incentive payout of 150% of base pay. However, there would be no incentive payout for pension fund performance that is flat against its benchmark. Under the prior version of the metric, the CEO was denied an incentive payout only when the pension fund underperformed its benchmark by 15 basis points.

Plan performance is just one metric of six and is weighted 15%. The other five metrics are organizational leadership priorities, enterprise operational effectiveness, investment office, customer service and stakeholder engagement.

Separately, Ms. Frost reported that 7 of the 10 victims allegedly defrauded by a former CalPERS employee have gotten back three-quarters of the money taken from their dormant accounts.

On April 16, 2021, CalPERS sued former employee Gloria Najera, then a 25-year veteran of CalPERS and a former associate governmental program analyst. CalPERS alleged that Ms. Najera took $685,692 from the dormant accounts, depositing the money in bank accounts she controlled, or paying off her or family members' debts.

Following a criminal investigation it had launched in January 2021, the California Highway Patrol referred the potential criminal case to the state attorney general's office, Ms. Frost said. In May, the state attorney general's office filed a felony complaint against Ms. Najera for elder abuse, identity theft and grand theft. She was arrested May 19.

CalPERS' civil case has been stayed pending the outcome of the criminal case, Ms. Frost said.

Last year, CalPERS made changes to its systems, locking down dormant accounts with additional and putting access controls in place, Ms. Frost said.

In other action, the board voted to support a state bill that, among other things, would require a health-care facility, service plan, insurer or pharmacy benefit manager to notify the California attorney general at least 90 days before entering into a merger or purchase agreement valued at $15 million or more. Private equity deals are among the transactions included in the bill, according to a State Assembly committee analysis. The bill would also prohibit certain non-competitive practices such as restricting a plan's or insurer's ability to steer an enrollee or insured person to another provider.