The CalPERS board approved a $1.15 million performance bonus for Frost, a sizable jump from the $766,000 incentive she received the previous year. Combined with a newly approved base salary of $641,000 — up from $601,000 — Frost’s total pay package now exceeds $1.7 million.

The raise comes as CalPERS continues to post strong investment gains and enjoys a rare stretch of steady leadership. Frost took the helm of the fund in 2016, a time when CalPERS held assets covering only about 65% of what it owed retirees, a lingering scar from the 2008 financial crisis. Since then, the fund has required government employers to increase contributions toward their workers’ retirement benefits, and it has now strung together three consecutive years of investment returns that outpaced targets.

Last year alone, CalPERS reported a 14.8% return, more than double its long-term goal. As of June 30, the fund’s portfolio was valued at $637.1 billion, enough to cover about 85% of its long-term obligations to members — a marked improvement from where things stood when Frost arrived.

CalPERS Board President Theresa Taylor praised Frost’s leadership in a statement, calling her “a CEO on top of her game” who is “delivering excellent results for CalPERS members.”

Not everyone on the 13-member board agreed. Board member Mulissa Willette and a representative for state Controller Malia Cohen cast dissenting votes. Deborah Gallegos, speaking on Cohen’s behalf, told the board during Wednesday’s meeting that the pay package failed to reflect the full range of opinions among board members and ignored California’s current budget challenges.

“The views of the board members with dissenting views were dismissed,” Gallegos said. “I cannot stand behind a motion which does not equitably take into consideration all relevant factors, particularly in light of the current structural deficit in California.”

The bonus also drew criticism from several retirees affiliated with the Retired Public Employees Association, a group led by former CalPERS board member Margaret Brown, who addressed the board directly.

“There is something fundamentally wrong when public service compensation begins looking like Wall Street compensation,” Brown said.

Despite the record bonus, Frost remains far from the top earner among California’s two major public pension systems. Chief investment officers at both CalPERS and the California State Teachers’ Retirement System typically out-earn their agencies’ chief executives. CalPERS Chief Investment Officer Stephen Gilmore brought home $2.2 million in total compensation last year, while his CalSTRS counterpart, Scott Chan, earned $1.4 million, according to figures from the State Controller’s Office.

Frost’s bonus tends to draw early attention each year simply because of scheduling — CalPERS board meetings fall earlier in the calendar than those at CalSTRS, which does not disclose its own executive bonuses until November.

Frost’s time leading CalPERS has not been without turbulence. Between 2019 and 2024, the fund churned through three different chief investment officers, the executive responsible for shaping CalPERS’ investment strategy toward its 6.8% annual return target. That instability ended when Gilmore was hired in 2024, bringing a measure of continuity to the fund’s top investment post.

Original source: CalMatters

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The discussion was sparked by the resignation of Jacob Coxon, a researcher who left AI company Anthropic and went public with warnings that the industry’s leading firms may be putting humanity at risk. In a social media post, Coxon — who previously worked at OpenAI — accused both Anthropic and OpenAI of “gambling with our lives” in their rush to build increasingly powerful, humanlike artificial intelligence systems. He suggested the consequences could arrive within the next several years.

The comments rattled more than just Silicon Valley. They reached the boardroom of CalPERS, the pension system that manages retirement funds for millions of California’s public employees and retirees, with assets totaling roughly $655 billion.

During Monday’s meeting, CalPERS Board President Theresa Taylor raised Coxon’s resignation directly with Chief Investment Officer Stephen Gilmore, framing the issue in stark terms.

“This is humanity,” said Taylor, a retired state worker and former union leader, as she pressed the board to consider whether CalPERS should speak out publicly on the risks posed by unchecked AI development.

Taylor noted that even in the wake of Coxon’s warning, the chief executives of both Anthropic and OpenAI — Dario Amodei and Sam Altman, respectively — have called for the industry to slow down its race toward more advanced AI systems, an acknowledgment that even top developers see cause for caution.

Taylor argued that CalPERS has a stake in the conversation beyond its investment portfolio. While the board’s primary duty is to safeguard the fund’s financial performance, she suggested that ignoring the societal risks of AI would be shortsighted.

“If we don’t have retirees, if we don’t have state workers because of AI, we don’t have a pension fund,” Taylor said, making the case that protecting the workforce and the public at large is inseparable from protecting the fund’s long-term stability.

Despite the pointed exchange, the board did not commit to issuing any formal statement on AI risks, nor did it signal any change to its investment strategy involving artificial intelligence companies. Gilmore, addressing the board, acknowledged the uncertainty surrounding the technology’s trajectory, saying the future holds “a very wide distribution of possible outcomes.”

Taylor responded with a mix of skepticism and concern, noting that while investors continue to chase the financial upside of the AI boom, the ultimate result could look nothing like what anyone expects.

“We’re waiting for the money,” she said, “and unfortunately the outcome could be something entirely different.”

For now, CalPERS — like many major institutional investors — remains deeply intertwined with the fortunes of the AI sector, even as some of its own leaders openly question whether that reliance carries risks far greater than market volatility.

Original source: CalMatters

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The California Public Employees’ Retirement System reported Monday that its investment portfolio grew 14.8% during the 2025-26 fiscal year, more than doubling the fund’s target return of 6.8%. It marks the second year in a row that CalPERS has posted double-digit gains, fueled largely by a strong stock market.

CalPERS CEO Marcie Frost called it the fund’s best performance since 2014, not counting 2021’s market rebound following the pandemic crash. In a statement, she credited the fund’s investment team for staying the course through market swings.

“Our team has maintained a disciplined approach to building the health of the pension system, and our improved funded status shows this effort is paying off for our 2.4 million members,” Frost said.

The fund ended the fiscal year with total assets of roughly $637.1 billion, an increase of about $80 billion from the previous year.

For local governments, school districts and other public agencies throughout Southern California, CalPERS’ investment performance carries real financial weight. When the fund falls short of its targets, those agencies — and by extension, taxpayers — are required to contribute more money to make up the difference. Strong years like this one ease that burden.

CalPERS remains what’s known as underfunded, meaning its assets don’t fully cover everything it owes to current and future retirees. As of this year, the fund’s assets equal about 85% of its total obligations. That’s a marked improvement from a decade ago, when CalPERS was funded at only about 68% in the aftermath of the Great Recession. Since then, a series of reforms have required both public agencies and employees to contribute more toward pension costs.

The strong earnings report lands at a politically sensitive moment. Public safety unions representing police officers and firefighters are pushing state lawmakers to expand retirement benefits for the first time since 2012, when then-Gov. Jerry Brown signed legislation scaling back pension perks amid the state’s fiscal troubles. A robust investment year could give legislators more confidence to revisit those limits.

Still, not everyone is convinced CalPERS is performing as well as it could. Critics — including some candidates who ran unsuccessfully for seats on the CalPERS board last year — argue the fund’s investment strategy is overly complicated and could be delivering stronger returns with a simpler approach.

Among the most vocal critics are former CalPERS board members Margaret Brown and J.J. Jelincic, now affiliated with the Retired Public Employees Association. They’ve raised concerns about the fund’s growing reliance on private equity investments, which often come with steep fees and less transparency about their true value. Both backed a state bill this year that would have required CalPERS to disclose more details about those investments, though the measure ultimately failed.

“These are very good results, however you need to think about how you got there,” Jelincic told the board. “You expanded high risk private equity and you moved into higher risk segments within that asset class.”

Fund leadership has defended the strategy. Last year, the CalPERS board approved a new approach that gives Chief Investment Officer Stephen Gillmore greater flexibility to shift investments quickly across the entire portfolio, rather than being confined to specific categories like real estate or private equity. Under the policy, CalPERS aims to keep about 75% of its holdings in stocks and 25% in bonds.

Frost and Gillmore have both said private equity remains a key piece of the fund’s long-term strategy. CalPERS formally opposed the transparency bill, arguing it could cost the fund billions of dollars in missed investment opportunities.

“Investing in the private markets gives us potential to earn higher returns while spreading our risk from the often volatile public stock market,” Frost told the board.

For the year, CalPERS’ private equity holdings returned 17%, while its stock investments gained 24% — outpacing the S&P 500, which rose 21% over the same period.

Original source: CalMatters

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