TO: HONOR ABLE MAYOR FROM: Boards of Administration
AND CITY COUNCIL Police & Fire Dept. Ret.
Plan and Federated City
Employees Ret. System
SUBJ
ECT: SEE BELOW DATE: August 28, 2023
SUBJECT: AMENDMENT TO CITY’S PAY PLAN FOR THE DIRECTOR OF
RETIREMENT SERVICES AND CHIEF EXECUTIVE OFFICER (CEO),
ASSISTANT DIRECTOR AND CHIEF INVESTMENT OFFICER (CIO),
SENIOR INVESTMENT OFFICER AND INVESTMENT OFFICER
CLASSIFICATIONS
RECOMMENDATION
1. Ac
cept the Director of Retirement Services and Chief Executive Officer (CEO) compensation study results.
2. Accept the Chief Investment Officer (CIO) and Retirement Investment Officers compensation study results.
3. Adopt a resolution to amend the City of San José Pay Plan effective September 26, 2023 as follows:
(a).
Change the total annual salary range for the classification of Director of Retirement Services & Chief Executive Officer U (7501) from $244,134.49 - $345,857.33 to $244,134.49 - $376,488.00;
(b) Change the total annual salary range for the classification of Assistant Director & Chief Investment Officer U (7506) from $279,737.54 - $375,102.57 to $279,737.54 - $408,300.00;
(c) Change the total annual salary range for the classification of Senior Retirement Investment Officer U (7507) from $152,703.48 - $238,033.77 to $152,703.48 - $266,409.00; and
(d) Change the total annual salary range for the classification of Retirement Investment Officer U (7505) from $144,514.82 - $204,364.25 to $144,514.82 - $231,660.00.
COUNCIL AGENDA: 9/26/23
FILE: 23-1296
ITEM:
3.6 Replacement Memorandum - 9/19/2023
HONORABLE MAYOR AND CITY COUNCIL
August 28, 2023
Subject: Amendment to the City Pay Plan for the Director of Retirement Services and Chief Executive Officer (CEO), Assistant Director and Chief Investment Officer (CIO), Senior Investment Officer and Investment Officer Classifications
SUMMARY AND OUTCOME
This memorandum is presented by the Boards of Administration (“Boards”) for the City of San Jose’s Police and Fire Department Retirement Plan and Federated City Employees Retirement System (the “Plans”). The Boards have taken action, through multiple open and public meetings, to recommend to the City Council that the Council approve salary range increases for the Plans’ Chief Executive Officer, Chief Investment Officer and investment professional staff. The increases are designed to help recruit and retain valuable members of the Plan’s executive team and to incentivize them to continue to produce superior investment results for the Plans – results that help ease the fiscal burden on the City’s General Fund. The increases presented here are designed to bring these individuals in line with their contemporaries in comparable public employee retirement systems.
BACKGROUND
In 2014, the City Council approved and the citizens passed Measure G into law. Measure G mandates that the Boards recommend to the City Council the appropriate compensation packages for the positions of the CEO, CIO and investment professional staff. In formulating compensation recommendations, Measure G requires that the Boards “shall consider compensation of equivalent positions in comparable United States Public Pension Plans in recommending the total compensation” for those positions. City Charter, Art. XVIII, Sec. 810.1(e).
In accordance with Measure G, the Joint Personnel Committee chartered by both Boards diligently examined compensation structures and levels of multiple other public employee retirement plans comparable to San José’s and engaged a recognized compensation consultant to provide a comparative analysis of other similarly situated peer plans. The resulting analysis1 revealed that the compensation ranges set for the Plans’ CEO, CIO and investment professional staff trailed significantly behind our peers, and that the Plans were in a highly competitive environment for attracting and retaining the specialized expertise required to administer a combined $8 billion in public employee retirement funds. Competitive forces exist not only in the state-wide marketplace for public employee retirement executives, but also in the immediate Bay Area region for top-notch investment professionals experienced in complex global public and private markets.
Based on the data presented to the Joint Personnel Committee and the Boards over the course of the past year, the Boards unanimously acted to recommend City Council approval of the following compensation adjustments.
1 The analysis accompanies this memorandum.
HONORABLE MAYOR AND CITY COUNCIL
August 28, 2023
Subject: Amendment to the City Pay Plan for the Director of Retirement Services and Chief Executive Officer (CEO), Assistant Director and Chief Investment Officer (CIO), Senior Investment Officer and Investment Officer Classifications
ANALYSIS
CHANGES IN BASE SALARY RANGES BY POSITION
The Boards last surveyed competing compensation ranges and updated the Plans’ salary ranges five years ago. Today, our current top base salary ranges for the investment officers serving the Plans are below those of comparable individuals in other public employee retirement plans in California, as determined by our consultant’s salary survey and the most recent annual survey results published by the California Association of Public Retirement Systems. The recommended changes below are based on the adjusted base salary maximum amounts paid to the 75th percentile of the Plans’ comparators, as established by the consultant’s survey. Despite operating in one of the most expensive coastal California markets, the Boards intentionally elected to hold the ranges to the 75th percentile level and not seek to exceed that level, however warranted by the comparative data.
The recommended increases do not require that these positions be paid at the top of each range; rather the full range will be available to the Boards upon their annual performance review of those holding each position, following City guidelines for these unclassified positions.
The Boards recommend:
Change top of CEO total annual salary range from $345,857.33 to $376,488 annually Change top of CIO total annual salary range from $375,102.57 to $408,300 annually Change top of Senior Investment Officer total annual salary range from $238,033.77 to $266,409 annually
Change top of Investment Officer total annual salary range from $204,364.25 to $231,660 annually
We will be pleased to address any comments, questions or concerns you may have. Thank you for your courtesies.
ATTACHMENTS
A: September 30, 2022 Total Compensation Study - CEO Final Report B: October 4, 2022 Total Compensation Study Final Report C: CEO Salary Survey Supplemental Report
D: CIO Salary Survey Supplemental Report
E: Proposed Salary Ranges