CalPERS board approves $766,782 incentive award for CEO amid public objections

The CalPERS Board of Administration on Sept. 17 approved an incentive award of $766,782 for Chief Executive Officer Marcy Frost for fiscal year 2024–25 and set Frost’s 2025–26 base salary at $619,440, CalPERS staff reported.

Michelle Tucker, a CalPERS staff member who presented the item, said the amounts were calculated under the board's compensation policy and the Performance Compensation and Talent Management Committee’s closed‑session evaluation. "Based on the committee's closed session evaluation along with the incentive metrics outcomes, the resulting fiscal year 20 four‑twenty‑5 incentive award for the CEO is $766,782. Based on the committee's closed session evaluation, the CEO's 25‑26 base salary is $619,440," Tucker said.

The decision drew critical public comment before the vote. Margaret Brown, president of the Retired Public Employees Association (RPEA), told the board the timing and size of the award were inappropriate during an active board election and while the fund remains underfunded. "This bonus is wrong. It's excessive, and it must end," Brown said.

Other public commenters cited the fund's reported 79% funded status and questioned whether measured performance justified the award. Al Garvey of RPEA said the package was "disproportionate compared to other pension funds" and argued that the fund's long-term funded status remained a priority. Several callers on the phone and in the room urged the board to reject or reduce the award.

Board voting and dissent: The motion to approve the incentive award carried. Board member Jose Luis Pacheco explained his abstention after the vote, saying he could not justify the award while the system remains underfunded and members face modest retirements; he said he respected the CEO and staff but abstained "out of loyalty to the CalPERS members." One trustee, Melissa Willette, recorded a No vote during the roll call.

What led to the decision: The Performance Compensation and Talent Management Committee conducted a closed‑session evaluation of the CEO and recommended the award; staff then presented the compensation calculations during open session. The board voted after receiving public comment.

What the board did not do: There was no reversal of the committee recommendation and no further amendment to the award in open session. The board did not direct additional analysis or require changes to the compensation calculations during the meeting.

Next steps and context: The item followed broad public interest and multiple public commenters urging restraint given the fund's funding level and recent health‑premium increases. Trustee Pacheco asked that the board's fiduciary responsibility to the fund's 2.3 million members guide such compensation decisions.