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CalPERS finds itself in another leadership controversy with CEO

  • Assets under Management: $360 bln
  • PE allocation: 7.7 pct
  • Whom to contact: Megan White (
  • Why this is important: CalPERS is moving into a new PE model and leadership controversies may threaten its good LP reputation

California Public Employees’ Retirement System, the largest pension system in the country and a major investor in private equity, has a leadership controversy on its hands.

CalPERS has dealt with its share of leadership scandals. The latest situation involves its chief executive, Marcie Frost, who has been accused of falsifying her educational background on a document prepared by executive search firm Heidrick & Struggles. Frost joined the pension system in October 2016.

Questions about Frost’s educational qualifications were first raised by the blog Naked Capitalism in August. The blog reported that Frost lied about her education by stating that she was enrolled in a dual-degree program at Evergreen State College in Olympia, Washington.

Frost had taken no classes at the college since 2010 and was never enrolled in the program.

While most board members, including Priya Mathur, CalPERS president, and Bill Slaton, supported Frost and claimed they were not misled, there was some dissension in the ranks. Board member Margaret Brown asked for an investigation.

At subsequent CalPERS meetings, several public employee unions and advocacy groups voiced their support for Frost, but some retirees and public employees also asked for an investigation and board action.

Recently, California State Treasurer John Chiang called for an independent investigation into Frost’s hiring.

“The investigation is not necessary,” Mathur told Buyouts in an interview. The board had not been misled, and Frost’s resume had nothing on her education, she said. “The board unequivocally believed then, and believes now, that she is the best for CalPERS.”

“The Heidrick & Struggles document was never seen by Marcie Frost,” Wayne Davis, spokesman for CalPERS, said in an email to Buyouts.

Another board member, who wanted to remain anonymous, said other members’ support for Frost is an attempt to cover their own tracks.

“It also casts a doubt on the credibility of the board with investors,” the board member said.

Thus, the board’s decision to award Frost an $84,000 bonus and a 4 percent raise following her annual performance review raised some eyebrows. Brown voted against it.

“Frost’s review took place in September and her compensation speaks volumes on the board’s confidence in her,” Mathur said.

Search firm 

CalPERS used Heidrick & Struggles as executive search when it was looking for a new executive director to succeed Anne Stausboll.

Critics of the hiring have questioned why “the highest role at CalPERS had no educational requirement,” a source said.

When Frost and Stausboll were hired, the job descriptions for the CEO role did not have an educational degree requirement, according to the descriptions seen by Buyouts.

“That should have been a red flag for the board to begin with,” said the board member. And Heidrick & Struggles should have examined it, the board member said.

Frost’s role called for depth and breadth of experience, management capabilities, cultural compatibility and shared values, Mathur said. An educational qualification was not the most relevant criterion, she said.

The board would not focus on it for future job descriptions, Mathur said.

Heidrick & Struggles did not respond to requests for comment.

Indeed, all chief executives at pension funds hold at least an undergraduate degree. Jack Ehnes, CEO at CalSTRS, holds a bachelor’s degree from Cornell University and a master’s degree from Vanderbilt University.

Angela Rodell, CEO at Alaska Permanent Fund Corp, has a bachelor’s degree from Marquette University in Milwaukee and a master’s from University of Kentucky in Lexington.

Tracy Guerin, the director at Frost’s former employer, Washington State Department of Retirement Systems, completed her bachelor’s degree at Evergreen State College.

In May, Charles Asubonten resigned as chief financial officer. Asubonten was hired in September.

The system’s former CEO, Fred Buenrostro, in 2016 was sentenced to 4 1/2 years in prison for accepting bribes from former CalPERS board member Alfred Villalobos.

Update: This report was updated to clarify that Charles Asubonten resigned. An earlier version stated that his resume included false information. That allegation could not be confirmed, and Asubonten denied that his resume contained false or misleading information.

Clarification: This article has been updated to clarify that Frost was accused of falsifying her educational background in a document prepared by Heidrick & Struggles. The updated article also includes a comment from Wayne Davis, the CalPERS spokesperson.

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