Wharton Pension Research Council Working Papers

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Working Paper

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We examine the relation between public pension plan Chief Investment Officer (CIO) compensation and plans’ investment performance. Higher paid CIOs outperform their counterparts by 47 – 60 bps per year, largely through increased and superior investment in private equity and real estate. This outperformance generates an additional $74.91 – $95.63 million in economic value. Plans offering higher compensation hire better educated CIOs and are more likely to retain their CIOs. Higher CIO compensation is positively correlated with the use of incentive compensation, but incentive compensation does not directly affect performance. Demand- and supply-side frictions help explain the variation in CIO pay and the persistent low compensation paid by some plans despite the positive relation between compensation and performance.


Public pension fund performance, compensation, incentives

Working Paper Number



Sugata Ray gratefully acknowledges a summer research grant from the Culverhouse College of Business at the University of Alabama.

Copyright/Permission Statement

All findings, interpretations, and conclusions of this paper represent the views of the authors and not those of the Wharton School or the Pension Research Council. © 2022 Pension Research Council of the Wharton School of the University of Pennsylvania. All rights reserved.


We are grateful to Vikas Agarwal, Geert Bekaert, Grace Guo, Andrew Johnston, and seminar participants at the University of Alabama, the University of Central Florida, the University of Dayton, Middle Tennessee State University, and the 2021 Financial Management Association Annual Meeting for helpful comments and suggestions. We also thank Eren Cifci and Nicole Kozhukhov for excellent research assistance.

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Economics Commons



Date Posted: 22 March 2022