In the midst of ongoing tensions surrounding the potential for military conflict with Iran, we shift our focus back to a recurring topic: CalPERS. You’ll find additional insights in the Links section, but here’s a quick update: Former President Trump has once again made threatening remarks towards Iran. This has coincided with reports on Twitter regarding the U.S. preparing military forces for a possible significant attack.
BREAKING: The U.S. is now directly posturing for a large-scale attack, with intense Air Force activity across the Middle East and particularly near southern Iran.
At least seven U.S. aerial refueling tankers are operating over the Persian Gulf, while an MQ-4C Triton conducted a… pic.twitter.com/1jAkMWuqzD
— The Hormuz Report (@HormuzReport) September 20, 2026
Despite the rising tensions, there were no major incidents overnight, and the trading week has commenced. With Xi and Trump scheduled to meet on Thursday, it seems unlikely that there will be any rash actions taken between now and then.
Meanwhile, CalPERS continues its troubling trend of dramatically increasing Marcie Frost’s compensation without justification. By “unjustified,” we refer not only to the sheer amount but also to the questionable basis for such a significant bonus under her existing pay structure.
For 2026, Frost’s bonus totaled $1,149,836, which—combined with her salary of $601,398—brings her total remuneration to an astonishing $1,751,234. This reflects an alarming 18.33% increase in publicly disclosed pay over her nine-year tenure at CalPERS.1
These figures don’t even encompass the undisclosed long-term compensation award that Frost received. Her new salary for 2026/2027 is set at $641,250. Since when are public officials entitled to raises that significantly outpace inflation?
To illustrate the absurdity of this situation, I recently conversed with a litigator new to the pension sector who remarked that despite Frost being merely a high school graduate, her pay seems excessive. Any positive investment returns attributed to CalPERS can largely be credited to market conditions and the Chief Investment Officer and their team, rather than Frost herself. Historically, on competitive Wall Street, CEOs often earned less than top traders. For example, Salomon CEO John Gutfreund made around $3 million while his bond arbitrage desk chief, Lawrence Hilibrand, took home $23 million.
Although CalPERS does pay its CIO more than Frost, the disparity does not align with Frost’s contributions to the fund’s performance. Frost often presents herself as having investment expertise, despite largely operating in administrative roles; one notable CalPERS retiree has even equated her knowledge to that of a clerk typist. Furthermore, her financial disclosure, the annual Form 700, shows no investments, indicating she likely holds mutual funds and cash instead.
Additionally, the board has been penalizing members who dare to challenge these excessive compensations. During an open meeting following the compensation decision, board member Malia Cohen, the State Controller, expressed her dissent publicly through a representative.
On Tuesday, board members convened in closed session to evaluate Frost’s performance and bonuses. Cohen’s delegate, Deborah Gallegos, voiced that the Controller felt the compensation package failed to reflect the full range of opinions regarding Frost.
“Dissenting views from board members were disregarded,” Gallegos stated on Cohen’s behalf. “I cannot support a motion that does not adequately consider all pertinent factors, particularly in light of California’s current structural deficit.”
This incident is a continuation of a troubling pattern.
Last September, as Chair of the committee overseeing executive compensation, Mullissa Willette—a CalPERS Board member and SEIU 521 President—voted against CEO Marcie Frost’s bonus. At the start of 2025, Willette held three committee leadership roles: Chair of the Performance, Compensation & Talent Management Committee and Vice Chair of the Finance & Administration and Investment Committees. However, in 2026, her leadership positions disappeared.
Willette wasn’t merely removed as Chair; she was entirely taken off the committee. What message does this send to other CalPERS Board members? If you exercise independent judgment, challenge the majority, and vote “no” when you believe it is warranted, you risk being ousted from the inner circle.
A fiduciary board should encourage diverse opinions and promote independent thinking. Board members should not feel pressured that an unpopular vote might jeopardize their committee roles.
Now, let’s hear from the CalPERS retiree organization, RPEA, as they share their perspective:
CalPERS Board Misleads the Public About CEO’s $1.15 Million Bonus
CalPERS Board members are attempting to justify CEO Marcie Frost’s staggering $1.15 million bonus by referencing the fund’s 14.8% investment return.
However, their own data reveals that argument to be misleading.
Only approximately $271,000—less than a quarter of the bonus—was tied to investment performance. This means around $879,000 of the award had no relation to the fund’s investment returns.
So, what exactly did Marcie Frost do to warrant the remaining nearly $900,000?
CalPERS’ compensation policy permits bonuses based on broad categories such as “operational effectiveness,” “stakeholder engagement,” “customer satisfaction,” leadership, and individual business objectives. These criteria are developed and approved by the same Board that ultimately grants the bonuses and are often more subjective than tangible investment results, even though we suspect the returns are inflated. The policy even allows for a discretionary performance modifier.
The Board cannot defend one year of market returns as a justification for the entire bonus when less than a quarter of it is attributable to investment performance.
Additionally, CalPERS’ policy states that incentive payments related to investments should generally rely on five-year performance against benchmarks, not merely one strong year. A significant portion of the fund’s returns stemmed from broader market gains, rather than from Frost’s own investment choices or portfolio management. In fact, the CEO has NO role in selecting or managing investments.
If the remaining $879,000 was granted for outstanding management performance, the public deserves transparency:
Every performance objective used
The weight assigned to each objective
The actual results achieved
The threshold, target, and maximum payout for each measure
Any discretionary multiplier applied by the Board
Specific evidence supporting each rating
Instead, the public is presented with a convenient headline about a 14.8% return while the majority of the bonus remains unexplained.
This is a public pension trust fund, not a private company, nor a means to enrich public executives.
Retirees, workers, and public employers face increased contributions and rising costs while the pension system remains underfunded. In stark contrast, the CEO receives a bonus almost twice her annual salary.
CalPERS Board President Theresa Taylor reportedly labeled the increase as well-deserved due to the fund’s returns. Yet, the Board’s own compensation structure undermines that claim: approximately three-quarters of the bonus was awarded for other reasons.
The Board should cease concealing a nearly $900,000 management award behind the facade of investment returns. If performance was truly extraordinary, it should be disclosed, documented, and justified publicly.
Until then, this is not a reward for exceptional investment results; instead, it is an extraordinary payout seeking validation.
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1 From another RPEA statement issued prior to the board meeting to determine Frost’s compensation:
RPEA Criticizes CalPERS’ $52M Executive Bonus Pool as CEO Marcie Frost Approaches $1.5M Compensation for “Meeting Expectations”
SACRAMENTO, CA — On Wednesday, September 16, 2026, at 8:45 a.m., the CalPERS Board of Administration will vote on a more than $900,000 incentive award for CEO Marcie Frost, potentially elevating her annual compensation above $1.5 million.
The Retired Public Employees’ Association of California (RPEA) is vociferously contesting the vote, unveiling a $52.7 million total executive incentive pool with minimal performance thresholds that permit maximum payouts for mediocre results. While the CEO’s salary has nearly quadrupled since 2017, vital internal operations remain neglected and frontline workers face stagnant wages.
CEO COMPENSATION 2017: $ 387,075 2021: $ 633,062 2025: $1,368,180 2018: $ 406,714 2022: $ 694,693 2026: $1,500,000 or more 2019: $ 444,547 2023: $ 752,661 2020: $ 489,167 2024: $1,254,419
Four Core Failures Illustrated by RPEA:
Low Performance Standards: CalPERS’ incentive program grants maximum payouts for minimal improvements. A stakeholder-engagement metric achieves its highest payout level for just a 1.5% increase, and investment metrics reach maximums by beating benchmarks by merely 0.20%.
Subjective Awards: A significant 25% of the CEO’s evaluation is based on purely subjective criteria, such as “communication,” allowing boards to distribute substantial public funds arbitrarily.
Neglected Infrastructure: While executive bonuses swell to $52.7 million, CalPERS’ legal department suffers from a 40% vacancy rate, endangering the system’s operations.
Stagnant Worker Salaries: Frontline state workers receive no pay raises, creating a glaring and unjustifiable disparity against the staggering increase in executive pay.
This decision exemplifies a flagrant misuse of public resources and a significant betrayal of the public servants who sustain California’s operations. For taxpayers, using public trust funds like a Wall Street playground to distribute near-million-dollar bonuses for ordinary tasks is an affront. For public workers, witnessing a single executive’s pay surge while strict salary caps restrict their wage increases is entirely unacceptable. Worse still, leadership enriches itself while allowing significant staffing shortages that leave rank-and-file employees overworked and under-resourced.
“I don’t fault Marcie Frost for accepting the pay. I hold the CalPERS Board accountable for failing to manage costs,” stated RPEA President Margaret Brown. “Bonuses should reward exceptional performance, not merely the completion of assigned duties. Pension funds exist to provide retirement benefits, not to enrich executives.”
