Compensation at STRS Ohio. Andy Marfurt, Director, Human Resource Services June

Transcription

1 Compensation at STRS Ohio Andy Marfurt, Director, Human Resource Services June

2 Compensation Philosophy Retirement Board adopted compensation philosophy in Provides overall guidance in developing and administering a total compensation program that attracts, motivates and retains top quality associates for the benefit of our members. Core principles that define STRS Ohio s compensation strategy are: Fairness and consistency Internal equity Market competitiveness Flexibility Financial viability 2

3 Compensation Philosophy STRS Ohio compensation components Base pay Variable pay Benefits Professional development 3

4 Non-Investment Compensation Review internal equity and external comparables. Internal Utilize current job description. Review internal equity of associates in same, similar positions. 4

5 Non-Investment Compensation External comp analysis performed internally by human resources every year. Compare salary and compensation data from: Five national surveys. Representing more than 8,000 participating organizations. 1.5 million employees. Data primarily from private sector corporations, with a few comparisons from large/leading public pension funds. Survey data helps create the 25th, 50th (beginning of hiring range), 62.5 (market) and 75th percentiles of a position. 5

6 Tools and Administration Annual Performance Reviews Merit increases are awarded during the June annual performance review process to associates whose performance warranted them. No COLA or step increases. Fiscal year 2017 merit increase budget of 3%. 6

7 Investment Compensation at STRS Ohio John Morrow Deputy Executive Director, Investments June

8 STRS Ohio Investment Department Profile $70 billion assets under management. Majority of benefits are funded by investment returns. High level of internal, actively managed assets. 72% internal, 28% external 84% active, 16% passive Staffing 118 total associates. Primary differentiation compared to many peers attributable to: Real estate: 85% internal, 37 associates. International equity: 60% internal, 17 associates. 8

9 STRS Ohio Investment Department Profile Investment costs (2014 CEM study): Total fund cost: $219 million; 30 basis points. Internal: $43 million; 20% of total investment costs. External: $176 million; 80% of total investment costs. 9

10 Investment Compensation Philosophy and Program Administration Philosophy Board is committed to internal management as a cost-effective alternative for achieving its investment objectives. Compensation plan is designed to attract, retain, motivate and reward above-average talent. A Performance-Based Incentive Program (PBI) is used in conjunction with base salary. Benchmark for total compensation is a blended peer group of 50% large/leading public funds and 50% national private sector firms. 10

11 Investment Compensation Philosophy and Program Administration Philosophy Compensation study is completed by independent consultant every three to five years. Payouts are based on total fund, asset class and portfolio performance. Alignment between PBIs and organizational objectives. 11

12 Investment Compensation Philosophy and Program Administration PBI Program administration Program is subject to review/approval annually by Board. Eligible positions and maximum incentive percentages approved each year. 90 associates are currently eligible for PBI Program. Eligible associates make direct portfolio/asset class decisions, or perform analysis that facilitate or implement portfolio decisions. Only quantitative goals are utilized based on one- and fiveyear results. 12

13 Investment Compensation Philosophy and Program Administration PBI Program administration Checks and balances are significant. At beginning of each year, annual goals submitted to executive director following review by: CIO/investment staff, human resources and internal audit. At conclusion of each year, executive director recommends final approval to Board following review of calculations/ payments by: CIO/investment staff, performance team and internal audit. 13

14 Investment Compensation Philosophy and Program Administration PBI Program administration Since July 1, 2006, STRS Ohio has received formal, third party verification annually that calculations and reporting of performance complied with the CFA Institute Global Investment Performance Standards (GIPS). 14