The executive director of the state's $50 billion public pension fund, who is already one of the highest paid public officials in Massachusetts, could double his $322,000 salary to well over $600,000 by meeting certain benchmarks under a bonus plan he has proposed to fund trustees.
Michael Travaglini, who received a 14 percent raise a year ago, refused yesterday to provide details of the performance-based compensation plan he has asked the board to create for himself and his top staff members. He said that the proposal would not be released publicly until he presents it to the nine-member Pension Reserves Investment Management Board at its meeting tomorrow.
"There is no requirement or obligation to do that," he said when asked for a copy of his salary plan. "It may or may not be accepted. It is just a proposal, and there is nothing in the public meeting law that proposals are public."
Sources who have reviewed the pay package told the Globe that the plan calls for Travaglini to get a minimum 20 percent hike and as much as a 100 percent increase in his salary, depending on the performance of the fund. Similar bonuses, based on benchmarks, are proposed for other top managers. The proposal requires approval by a majority of the board.
It was not clear yesterday how much support there is for the increases. The only public opposition came from Governor Deval Patrick, whose spokesman offered warm praise for Travaglini's stewardship of the pension fund, but said, "The proposal is out of alignment with other public pension officials who have similar duties."
Patrick's press secretary, Kyle Sullivan, said that the governor's representative on the board, Secretary of Administration and Finance Leslie Kirwan, will oppose the proposal.
A spokeswoman for state Treasurer Timothy P. Cahill, who chairs the state pension board, would not say whether Cahill supports the proposal.
"As a matter of practice over its 22-year history, the . . . board does not discuss preliminary proposals or agenda items in advance of public board meetings," Alison Mitchell said in a written statement. She also refused to release the proposal.
Last August, Cahill and the board approved a $40,000 raise for Travaglini. He was appointed to the post in early 2004.
Travaglini, who wins high praise from officials on Beacon Hill and from the world of investment funds for his management of the fund, is an East Boston native and Harvard graduate who served as the state's deputy treasurer under Treasurer Shannon O'Brien from 1999 to 2003.
Robert D. Arnott, chairman of Research Affiliates, a California-based investment management firm, said that pension funds should adopt the kind of compensation systems that Travaglini is proposing.
"One of the real problems with the public funds is a brain drain," Arnott said.
Performance-based compensation "makes all the sense in the world," he said.
Arnott cautioned that the benchmarks should be stretched out over three to five years, because one-year figures are random. He also said the pay package should avoid encouraging managers to take risks and should reduce the base salary while offering high incentives for performance.
It is unclear what benchmarks are contained in Travaglini's proposals and over what time period they would be measured.
Travaglini was quoted last January in a trade publication, Pensions & Management, as saying he wanted to initiate discussion of performance-based compensation for state pension board managers to ensure that the agency's salaries are competitive with private industry.
A host of other public pension plans are considering or are moving to adopt similar plans.
In South Dakota, for instance, the investment officer who oversees the state's $7 billion fund was given a $216,000 bonus on top of his $293,000 base salary last year. In Texas, the administrator of the $100 billion Teacher Retirement System receives a $402,000 base salary, but with incentive bonuses can make about $700,000 by 2010.
The country's largest state pension fund -- the California Public Employees Retirement System, which manages a portfolio worth more than $230 billion -- pays its chief investment officer an annual base salary of $534,000 and a performance bonus of up to 75 percent, which could total $934,000.
The salary for the chief investment officer of Maryland's $39 billion pension fund had been set by statute at $148,245, but the General Assembly recently passed legislation allowing the trustees to determine the compensation. The board has set the salary level at a range of $200,000 to $300,000, with a performance bonus of up to 33 percent, according to a spokesman for the fund.
Mitchell, Cahill's press aide, said that the state pension board has consistently exceeded the legislatively mandated 8.25 percent rate of return, including double-digit returns the last four years and 19.92 percent during the fiscal year that ended June 30. Between 2001 and 2005, the state fund's annualized rate of return was 7.04 percent. But its rate of return over the last decade was 10.51 percent.
Travaglini helps determine investment strategy for the fund, but hires managers to make the specific investments.
According to the Wilshire Trust Universe Comparison Service, a branch of the California investment advisory firm Wilshire Associates, the median increase for all public pension funds of $1 billion or more in the 12 months ending last June 30 was 17.69 percent.