He’s at it again.
This time CalPERS maverick board member J.J. Jelincic is taking on his colleagues and Attorney General Kamala Harris over a policy that excludes him from performance and pay decisions for the fund’s top executives. Harris says that Jelincic shouldn’t participate in those decisions to avoid conflicts of interest.
No other board member has similar limitations, but none have Jelincic’s employment history: 25 years in CalPERS’ investment office, including several working directly under current executives until he went on full-time leave to work on board business.
On Wednesday, Jelincic hand-delivered a letter to Harris’ offices in downtown Sacramento that asked how excluding him from high-level personnel decisions squares with his legal obligation as a board member to make decisions in the best interest of CalPERS members.
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“What lower levels of fiduciary standards and fiduciary liabilities apply to me?” Jelincic wrote in his letter to Harris.
Harris press secretary Kristin Ford referred questions to CalPERS. Fund spokesman Brad Pacheco said that the board wants to support Jelincic’s legal authority and responsibilities while ensuring it avoids conflicts of interest posed by his unique circumstances.
“It’s a balance of policies,” Pacheco said.
Jelincic’s 2009 election upset that balance by placing a CalPERS cubicle dweller among the 13 people who oversee a fund with current assets of $300 billion. How could managers judge Jelincic’s work and then give account to him for theirs? How can one person be both policymaker and policy follower?
In 2010, CalPERS asked then-Attorney General Jerry Brown for his view. Brown opined that Jelincic’s role in discussions about incentive pay for investment officers set up potential conflicts and advised he remove himself from those talks. The following year, the board put Jelincic on full-time leave from his regular job. He still receives his investment officer pay and benefits, but he is on loan to the board.
Then last summer, around the same time the board was considering candidates for CalPERS’ top investments position, the board again asked Harris to weigh in on whether someone in Jelincic’s position should be involved in executive hiring and evaluations.
Harris, now a Democratic candidate for U.S. Senate, said that Jelincic could have nothing to do it because, in theory, he could resign his board post and return to his old investments job. Jelincic should steer clear, she said, “if the decision affects the (board) member’s compensation, current or future, directly or indirectly through, for example, linkage to the compensation of a portfolio manager” because involvement would be an illegal conflict of interest.
Shortly after Harris’ opinion affirmed the policy, the board promoted Ted Eliopoulos, Jelincic’s former boss, to become chief investment officer. Jelincic had no input. He publicly criticized the decision, saying that Eliopoulos “doesn’t have the temperament or the management skills” for the position. The comments earned him a public reprimand “a breach of board governance policy of civility and courtesy as well as a breach of the CalPERS core values,” according to board President Rob Feckner.
Jelincic’s Wednesday letter was the second time he has asked her to clarify her conflict-of-interest opinion.
“A little over two months ago I sent you the enclosed letter,” he wrote, referring to a February 9 request for explanation. “You have neither responded nor acknowledged its receipt.”
Call Jon Ortiz, Bee Capitol Bureau, (916) 321-1043.