Home > News > Regulation > Arizona Public Safety Execs to Recoup Lost $170,000 in Bonuses

RegulationMay 16, 2019

Arizona Public Safety Execs to Recoup Lost $170,000 in Bonuses

Money, to be awarded for 2013 performance, had been delayed due to controversy.

After six years, the Arizona Public Safety Personnel Retirement System board agreed to pay more than $170,000 in retroactive bonuses owed to three executives and the estate of a deceased investment executive.

Paying the incentive bonuses was tied up for years amid probes that the quartet had inflated the plan’s investment performance to merit the extra pay. Multiple investigations cleared them, however.

The money finally paid to Mark Steed, the $10.3 billion organization’s chief investment officer, Lead Portfolio Manager Shan Chen, and former CIO Ryan Parham, who retired last year, totaled more than $120,000. The board granted another $51,481 to the estate of Marty Anderson, the onetime chief equity analyst, who died in 2016.

The delayed bonuses in question were owed for the four men’s performance in fiscal year 2013. But then the allegations arose that they had manipulated real estate valuations to collect bonuses on the pension fund’s higher returns. The investment officials chose to suspend receipt of the bonuses during scrutiny of the matter.

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Investigations followed, conducted by the trustees, independent auditors, Arizona’s auditor general, and federal authorities. In 2014, the investigators revealed they found no evidence to support the allegations.

The PSPRS Board of Trustees decided to “resolve its existing legal liabilities and to compensate members of the investment team who were owed but never received past incentives,” PSPRS Communications Director Christian Palmer told CIO. The trustees, he added, are “committed to moving forward to improving the financial health of our system.”

Why the delay? William T. Buividas, the board’s chairman and Phoenix police officer, said the issue was on the public safety pension board’s to-do list last year, yet due to an oversight, the issue didn’t come to a vote in open session. That was fixed Monday, when the board unanimously approved the settlements.

Palmer said that PSPRS no longer offers incentive payments for investment personnel but instead seeks to offer competitive pay and benefits to attract and retain staff. He said the plan attracts national accolades for its risk-adjusted portfolio with high alternative investment exposure.

“A lot of public pensions use incentive pay but I think in our unique experience, past boards found that it’s not hard for media and the public to draw the wrong conclusions,” he said. “The PSPRS portfolio is built to protect against losses that could create full-blown budget emergencies for local governments. A lot of people will have a hard time grasping that concept or how well you execute a risk-adjusted strategy when we’re in the middle of a historic bull run.”

Tags: Arizona PSPRS, bonus, Mark Steed, Pension

Home > News > Asset Allocation > CPPIB, Piramal to Launch $600 Million Renewable Energy Trust

Asset Allocation May 16, 2019

CPPIB, Piramal to Launch $600 Million Renewable Energy Trust

Canadian pension will contribute lion’s share and own up to 60% of venture.

By Michael Katz

The C$368.5 billion ($273.4 billion) Canada Pension Plan Investment Board (CPPIB), and India-based Piramal Enterprises Limited have signed a memorandum of understanding to co-sponsor a renewable energy-focused infrastructure investment trust that will have initial funding of $600 million.

The institutional investors said the trust would seek to acquire up to 1.5 gigawatts to 2 gigawatts of cash-generating renewable assets on a hold-to-maturity basis.

“The renewable energy sector is at an inflection point and is witnessing significant consolidation, the pace of which is likely to increase in the near future,” Piramal Group Chairman Ajay Piramal said in a release. “We believe that the timing is therefore opportune for aggregating assets in this sector given that the existing players are willing sellers in light of a constrained capital market environment— both debt and equity.”

CPPIB will contribute the lion’s share—$360 million—while Primal will pony up $90 million, and both will have the ability to add to that.

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CPPIB and Piramal Enterprises Limited will act as co-sponsors of the proposed trust, and hold up to 75% of the units with CPPIB alone holding up to a 60% stake, with Piramal’s stake at 15%. They said they will seek to raise capital from other investors for the remaining 25%. Prior to the trust’s launch, the two firms will jointly warehouse seed assets for the proposed trust, while Piramal will act as the sole investment manager and project manager for the trust.

“The foundation of this partnership is based on a shared ethos and values that leverage CPPIB’s global track record of value creation in the infrastructure space with PEL’s long-term strategy and goodwill in India,” said Piramal. “We are enthusiastic about the opportunity, as it is truly scalable, and continue to remain committed to creating value for our shareholders.”

According to CPPIB’s 2018 report on sustainable investing, the fund believes investing in renewables can provide attractive risk-adjusted returns. In December 2017, CPPIB signed agreements with Brazil’s Votorantim Energia to form a joint venture, acquiring two operational wind parks located in Northeastern Brazil through an initial contribution of C$272 million ($202.2 million) in equity.

And in January 2018, CPPIB announced plans to acquire a 6.3% stake in ReNew Power, an India-based renewable energy developer. CPPIB’s initial investment of $144 million was followed by an additional $247 million in April, bringing its total investment in ReNew to $391 million.

Tags: CPPIB, ESG, Pension, Piramal Enterprises Limited, Renewable Energy

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