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Bonus plan for investment pros good way to build team, Meier says

in News/Taxes
Interview with Wyoming State Treasurer Curt Meier

A plan to reward the state’s investment officials for good decisions will help the state build and maintain a team of skilled investment professionals, according to state Treasurer Curt Meier.

Meier, in an interview with Cowboy State Daily, said Friday the plan put forward by HB 222 would encourage smarter investments of state money, which in turn could help the state weather the fluctuations in energy prices.

“We need to attract and maintain a great team of investment people for the state of Wyoming,” he said. “If we can do our just to get (investment returns) to the median of what other states are doing, we can fix the budget crisis in our state.”

HB 222, which is awaiting the signature of Gov. Mark Gordon to become law, would reward investment professionals with a bonus equal to a percentage of their salaries if their investments exceed certain market benchmarks.

The bonus size would fluctuate based on the investment professional’s position. For instance, the state’s top investment officer, Patrick Fleming, could double his salary of $250,000 for good performance.

The bonuses would be paid out over three years to encourage investors to remain with the state. If they left state employment before the end of the three-year period, they would forfeit the remainder of their bonuses.

“We don’t want people to get into the hit and run attitude,” Meier said. You can have somebody … run way out on the risk cycle just to get his bonus and pick up his check and leave.” The arrangement will also help encourage investment officers to make prudent decisions so they are not fired, Meier said.

Good investment officers look not only at returns, Meier said, but the risks involved. For instance, he noted some corporation in recent years have been borrowing money so they could buy back their own stock.

“You have to figure out what those underlying things are that aren’t apparent to everyone,” he said. “You have to get the right people to do the right study, the right analysis. It’s not just the returns, it’s the risk-balanced returns.”

The bonus plan could eventually allow the state to reduce the fees it pays to investment firms, now estimated at $60 million to $80 million a year, Meier said, by increasing the number of talented investment professionals inside the state.

“We’re probably in the bottom 2 percent of what people are paid (nationally),” he said. “That’s why we’re trying to build the team with in-state people. We’re trying to grow our own here. Because it’s har to get somebody from outside who doesn’t like the bright lights and big city.”

Wyoming Legislative Week-in-Review

in News

Bills to repeal Wyoming’s death penalty and impose a 48-hour waiting period for abortions both died in the state’s Legislature this week, while a bill that would provide bonuses for state investment professionals who make good investments is headed to the governor’s office for his signature.

Cowboy State Daily’s Robert Geha has the rundown on the legislative winners and losers for the week.

Performance bill proposes bonuses for investment professionals

in News

By Cowboy State Daily

A bill that would reward the state’s investment professionals for making investment choices that perform better than the markets generally could increase the salaries of those professionals by up to 100 percent.

HB 222 would provide bonuses for investment professionals only if the performances of the investments they are managing exceed benchmarks set by certain segments of the stock and bond market, such as the Standard and Poors 500 or the Russell 3000 small stock index.

The amount of the bonus would vary according to the professional’s position. For instance, Patrick Fleming, the state’s chief investment officer, could double his $250,000 salary, while the bonus for a state senior investment officer, who makes $150,000, would be 75 percent of his salary. The bonus for an investment officer would be 50 percent of the officer’s salary.

However, the bonus would be paid out over three years, with 50 percent being paid out in the third year. If an employee left the state during that time, any part of the bonus not collected would be lost.

The bill is waiting for its first review in the Senate.

Performance compensation for investment professionals examined

in News

By Cowboy State Daily

A plan to reward the people who invest the state’s money for good choices is headed for the Senate floor.

HB 222 was approved by the Senate Appropriations Committee on Tuesday on a vote of 5-0 after winning the final approval of the House last week on a vote of 54-4.

The bill would award investment professionals inside the state Treasurer’s office if the investments they select meet certain benchmarks for performance.

Patrick Fleming, the state’s chief investment officer, said the the state needs to pay its investment professionals more because they are paid less than people in similar jobs in most other states.

“It’s very difficult with Wyoming in some of the tough times we’re having right now to increase salaries,” he said. “But what (legislators) said was ‘If you could beat the benchmark, then potentially we could give you a bonus.’”

Benchmarks for investment performance would be set by overall market performance.

Sen. Bill Landen, R-Casper, a supporter of the bill, said if the state’s investment professionals perform well, the state might be able to reduce the fees it pays to outside money managers.

In addition, Landen said, the bonuses might help keep high-quality employees in the state.

“How do we keep our investment officers longer so that we can develop that expertise and take good care of the state’s money and therefore cut into the $60 million or $80 million that we spend every year having somebody else manage our money?” he said.

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