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No public employee really needs to make as much as David Villa, the chief investment officer for the state’s pension and trust funds.

Then again, no private employee needs to make as much as Villa.

Herein lies the futility in bemoaning Villa’s compensation last year, which at $669,145 is almost five times that of the governor and 13 times the state’s median income: He’s only getting what we’ve long tolerated in the private sector for people who do the same work.

Villa is the “man behind our investment strategy,” according to State of Wisconsin Investment Board spokeswoman Vicki Hearing and supervisor to other SWIB money managers. Other managers also got bonuses last year that, when added to already healthy base salaries, bring compensation for some into the $300,000 to $400,000 range, according to a State Journal database of state employee compensation.

SWIB pays its money managers the median of what people in their industry in the public and private sectors get paid, not including managers on the coasts, Hearing said.

What’s more is that they would appear to be pretty talented and, relatively speaking, cheap.

Hearing said SWIB’s

investment strategies cleared

$583 million more in returns last year than the market as a whole.

And consider this: SWIB manages about 60 percent of the state funds’ assets directly but accounts for only about 14 percent of overall management costs, she said. Outside managers oversee the other 40 percent of investments but eat up 86 percent of management costs.

Bonuses are only doled out to managers who beat the benchmarks — or average returns — for the kinds of funds they’re managing, Hearing said, but there hasn’t been a year in at least the last 15 when they weren’t awarded. Even after the 2008 market collapse, $1.7 million in bonuses were set aside.

This compensation approach is common in the investment industry, according to Brian Hellmer, head of the UW-Madison Hawk Center for Applied Security Analysis.

Given the returns SWIB managers have been able to achieve, one can make the case that “they’re not overpaid at all,” said Hellmer, who knows Villa and said graduates of his program have worked at SWIB.

Still, other state employees should be so lucky to get paid the same way. Imagine if Division of Motor Vehicles workers got a cut of any bump in the number of specialized license plates they sold? What if in a year when camping reservations are down across the state, one state campground’s workers got bonuses for showing reservations at their campground weren’t down as much as at other campgrounds?

“It’s the nature of the business,” Hearing said of SWIB’s compensation practices. “If you want to hire someone, you have to compete.”

Like other state employees, SWIB money managers will be eligible upon retirement to draw from the same state pension funds they’ve been so adept at fattening.

Not that they’ll need it — assuming they’re even half as good at investing money for themselves as for the state.

But since when does need have anything to do with it?

Contact Chris Rickert at 608-252-6198 or, as well as on Facebook and Twitter (@ChrisRickertWSJ). His column appears Tuesday, Thursday, Saturday and Sunday.


Chris Rickert is the urban affairs reporter and SOS columnist for the Wisconsin State Journal.