University of California awards $841,000 bonus to investment officer who lost $791 million last year

Wow  this is nice work if you can get it.  I have heard about participation trophies going to children who compete in athletic contests and lose, but the Regents of the University if California have taken the concept too far when they award bonuses for losing money on investments.  Randy Diamond of Pensions and Investments reports:

The University of California Regents approved an $841,096 bonus for Jagdeep Singh Bachher, chief investment officer and vice president for the fiscal year ended June 30, according to a posting of regents' actions from its Nov. 16-17 meeting, on the UC website.

Mr. Bachher was paid a salary of $632,380. With the bonus, his total compensation amounted to $1.47 million. For the prior fiscal year, Mr. Bachher received a bonus of $874,838 on top of $615,000 salary, for a total compensation of $1.49 million.

So he had a bad year and has to subsist on a mill and a half.  I sure hope his kids aren’t going shoeless through the rainy Bay Area winter.

There is actually a method to the madness:

[The university] notes for the two- and three-year periods ended June 30, the annualized results were ahead of the benchmark by 50 basis points for both periods. “This resulted in a net gain to the portfolios of approximately $1 billion for the two-year period and $1.5 billion for the three-year period (over and above that which would have resulted in the absence of active management),” the posting said.

Awards are based on a rolling three-year assessment against performance benchmarks. Mr. Bachher was in charge of managing more than $97 billion for the university, including its endowment, pension plan and other investment pools, and the bonus is calculated on the performance of all the entities.

Apparently, the regents realize that this looks really, really bad:

The regents also approved a major policy change to future bonus calculations. The current plan allows awards to be paid in years when negative returns are realized, as long as UC's performance was better than the benchmark. New changes eliminate key components of bonus awards when the three-year rolling average is negative, even if it surpasses the benchmark.

Wow  this is nice work if you can get it.  I have heard about participation trophies going to children who compete in athletic contests and lose, but the Regents of the University if California have taken the concept too far when they award bonuses for losing money on investments.  Randy Diamond of Pensions and Investments reports:

The University of California Regents approved an $841,096 bonus for Jagdeep Singh Bachher, chief investment officer and vice president for the fiscal year ended June 30, according to a posting of regents' actions from its Nov. 16-17 meeting, on the UC website.

Mr. Bachher was paid a salary of $632,380. With the bonus, his total compensation amounted to $1.47 million. For the prior fiscal year, Mr. Bachher received a bonus of $874,838 on top of $615,000 salary, for a total compensation of $1.49 million.

So he had a bad year and has to subsist on a mill and a half.  I sure hope his kids aren’t going shoeless through the rainy Bay Area winter.

There is actually a method to the madness:

[The university] notes for the two- and three-year periods ended June 30, the annualized results were ahead of the benchmark by 50 basis points for both periods. “This resulted in a net gain to the portfolios of approximately $1 billion for the two-year period and $1.5 billion for the three-year period (over and above that which would have resulted in the absence of active management),” the posting said.

Awards are based on a rolling three-year assessment against performance benchmarks. Mr. Bachher was in charge of managing more than $97 billion for the university, including its endowment, pension plan and other investment pools, and the bonus is calculated on the performance of all the entities.

Apparently, the regents realize that this looks really, really bad:

The regents also approved a major policy change to future bonus calculations. The current plan allows awards to be paid in years when negative returns are realized, as long as UC's performance was better than the benchmark. New changes eliminate key components of bonus awards when the three-year rolling average is negative, even if it surpasses the benchmark.

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