ok, i'll come back to the next issues -- is there a total fund standard deviation number? that's what i was looking for. >> it's the volatility, it was in the charts -- >> it's looking like on the grass that we are moving in the right direction again. >> that's correct as well. >> it's ok to move right as long as you move up. >> just trying to pass judgment on when you review. now that we're getting ready to invest a lot more money in the area, it has to come from someplace else. this is total. we go back to the issue of benchmarks and that came up a few minutes ago. in the private equity, that benchmark is a premium over the s&p. what is the correlation between public equity and private equity? >> very high. >> .7,.8. >> but numbers like that indicate they're going to be out of alignment if we use that benchmark. >> that's right. >> because there have been periods where the portfolio has

beat the benchmark. >> yep. >> especially when the market is going down. >> i mean, as i was going to say, there is a whole science of bench marks. your benchmarks are consistent with others, but private market benchmarks have the phenomena they're difficult to -- they don't always match what you've invested in. >> commissioner driscoll: the next questions i'll bring up on the next subject. thank you. >> but, joe, on the risk return charts we looked at, every one of those is the risk piece is the standard deviation of the portfolio and the standard deviation of the san francisco portfolio on a relative basis has been getting smaller through time. >> commissioner driscoll: that leads me to the question -- tactically mr. coaker and staff have been wise to put the uncalled money in public equity and the program to equityize our

cash? that has paid off, that's a tactical decision away from the belgium mark. the question is -- benchmark. the question is, should we take on more risk? that's the balancing act, we never talked about it, but we're patting our ourselves on the back, about you should we take on more risk? it gets into uncertainty, yes or no? loaded question, but these reports have a lot of information where we never figured out how to use it without patting ourselves on the back. >> when the board went through the asset allocation system, i know brian led the discussion, of being more concerned going forward about the potential fort equity market correction and the desire to have lower risk, lower volatility in the portfolio to better protect against adverse times, while at the same time trying to add asset classes to keep your returns as high as you

can get them in a market that is going to be difficult to earn 7.5% going forward. but the whole discussion how much risk we should take is one that was part of the asset allocation discussion historically. you've been comfortable taking a fair amount of equity risk and you did it in a period where it was very rewarded. was that luck or skill? it was augmented by the actions of staff in terms of manager selection and positioning of the portfolio around that. >> any other questions from the board? comments? >> president stansbury: the linkage between the information and the decision is important and mr. coaker, that's something that you guys are working on with the public market portfolio, working through funds one by one, and figuring out

where we're going to go from here is this >> yes. president, the strategic plan we're going to be working through with the board on next week, a week from today, will include public equity. our plans for public equity. and between that meeting on march 21 and may 16 is the complete portfolio. so, i hope everybody will be able to attend, participate. there is a lot of data and a lot of planning and courses of action and there is going to be quite a bit of change, going from 35 to 41% in public equity. that's a lot of change. and fixed income to take that down to 9%, that's a lot of change. there is a lot of action coming forth and we put a lot of action into the time line, and the like, so there is a whole strategy to reducing our

systematic risk, our beta, in improving our alpha experience, meaning our excess returns. >> last month i asked about absolutely return and performance during the last mini correction in february. will we have -- >> i do have that data. i can tell you now. so public equity was down -- u.s. equity down 3.3. and international equity was down more than 4.5 bonds down 60 basis points. the hedge fund index was down about 2.5. our portfolio was down 0.6. so significantly outperformed. >> commissioner makras: those are great numbers. correlation, do we have that? can we maybe do a little more of a detailed analysis upon how it was that we performed -- the

high level numbers are really good, but i think it would be helpful for the board to have something for us to look at on paper that breaks it down with detail. >> i'll ask david to put that together. there he is. >> the market was down 9 or -- >> you know, i don't know we get data pricing enough. >> ok. >> it's hard to do that on aggregate basis. we do get some of that data for certain managers. but to add a little bit what bill was saying, i think it's important for the commission to recap and set context with you about what our objectives are with the absolute return

program. give some examples of why the market environment in february is exactly why we have it. so, to be specific, the objectives that we have are to dampen the planned volatility, to provide exposure to sources of return that are uncorrelated to equity markets and traditional fixed income markets. as bill mentioned, the aggregate performance of our return portfolio in february was down about 60-70 basis points. so on a relative basis to the traditional fixed income market to the global markets it's a very good measure. and also if we think about what the beta of our portfolio is, we have a limited number of data points because we've only had this portfolio funded for about 18 months. but we're tracking right there where we would expect to be with

a blade of .2 to the global equity market, we're right in range where we expect to be and outperforming a beta adjusted measure of what our beta measure would be. the other point i want to mention is that we've had very strong absolute performance from specific managers. case in point of the managers that we recognized for investment for the direct part of our absolute return program, all but one of those managers was positive during the month of february. so it's very strong manager selection. and more specifically, one of the managers that we funded recently outperformed its relevant benchmark by 7% in the month of february. so if we calculate a measure of how much we had invested and

that out-performance, it's $5 million in one month. so that's significant alpha creation. now, it's one data point. i would love to say that we could annualize that at the plan level. and i don't want to set an expectation like that, but i think what these data points show is that this is exactly why we have absolute return program. it's why we have a program that has a structure that it has. that gives staff the ability to bring recommendations forward. to identify some of the managers that we have high conviction in, that we think are going to be alpha contributors. we've seen that in february and we expect to see that again in the future. [inaudible] >> about the same. about.2.

yeah, great news, thank you very much. [inaudible] how much was that leverage on average for the month of february? >> we don't have the data points yet for february month end. but it's within our guidelines and our guideline is 3.5 times. so we're close to that guideline. probably in the range of 3.2 to 3.4 times. and just one last data point if i may -- the new guideline has been revised, correct, but we're still operating, kind of ramping up so we're still largely adhering to the prior guideline, with some of the additional investments we make, we expect

to get closer to the new guideline. [inaudible] >> our february month end nav is about 1.85. and the last data point that i wanted to share is that february, as i mentioned, it's one month, one data point, but the performance that we received in february was not at the complete expense of giving up performance during the month of january when the markets were significantly positive. so our portfolio was positive in january. and of those managers that i referred to in the direct part of the program, all but one who were positive during the month of february. those managers were positive in january and thus have produced a meaningful positive year-to-date number through the end of last month. >> great, thank you.

in case some of that got lost in translation for some of the members of the public, what people are commonly calling hedge funds made money in february, while the markets lost money. which is exactly why we're doing this. thank you very much. are there any other questions or comments from the board? seeing none, why don't we open to public comment? >> i would like to say, it's simpler than building cable cars. [inaudible] most pension funds would be very happy to get a 7-8% return on their investments.

and that is not difficult, not very difficult at all. one of the reasons we can't get 7-8% is because we spend hundreds of millions of dollars listening to investment consultants that give them bad advice, giving the kind of advice to invest in every fad that comes along. investing in hedge funds. i think hedge -- investment consultants got started in the 1600s when you were advising people to spend thousands of dollars. i think that's when the investments started. let me give you a portfolio returns, the past 90 years. ok. starting in 1926, 2016, 92 years, in those years you had the great depression, world war

ii, iraqi and afghanistan war. 1926 to 2016, if you had 50-50 investment in stocks and bonds, you would have annual return of 8.3%. portfolio 60-40. [inaudible] 10.2% annual return. so that's -- convention of 19 years. if you're all on the board in 19 years if now, i bet the exchange would be the same. so my advice is -- well, don't invest in anything -- >> thank you. are there any other members of the public that would like to address the commission? seeing none, we close the public comment. nexttime.

>> there is a -- item. >> item 8, report on managers under review. >> the second and third sentences are new. and they're repeated in each document. this is because i'm going from 45 45-31% in public equity. >> the new guy has to -- >> yeah, alan gets to share the good news and you get to share the bad news. >> as you know, this memo provides retirement board with details regarding the public market investment managers have been placed under review in accordance with the guidelines, manager of monitoring and retention. managers can be placed on the

list for a variety of reasons. most often it's because of performance. we're mindful of the nuance of their benchmarks. they can be placed on this list due to organizational changes, philosophy, style. guideline violations or other matters deemed relevant. managers placed under review are not eligible for additional funding and may be subject to asset reduction as we talk about the reduction of public equity and the reduction in liquid credit. at the end of the fourth quarter, two managers were added to the list. advent capital. and fidelity which runs international small cap strategy. removed from the litt, we know the -- six other managers remain on the list.

four equity and two fixed income. we've provided comments as bill noted for each of the eight managers. i don't know if you have comments, otherwise we'll turn it over to you guys for questions. >> president stansbury: any questions? >> yes, thank you. advent capital, the performance issues, trailed benchmark at 3 and 5 years. how can you both trail the benchmark and be above peers? >> it's not hard. the benchmark again is set not as a median of all peers, but s&p 500 for example, let's take

equities, the benchmark for s&p equities is s&p, that is the performance of the cap-weighted set of equities. as was mentioned earlier, over long periods of time, 75% of active managers underperform that benchmark. so again, the benchmark is sort of the theoretical what could have been achieved on a passive basis and how managers do after fees can be above or below that. in this case, advent is below its benchmark, but above its peer group. the whole peer group has done poorly. >> when we consider managers that underperformed, you have to consider both, compared to a benchmark and but all of the others. >> in this peer group there were 30 managers. >> can i give an illustration. consider three active managers and index. so universe of four.

the best performing of the four was index. the second was the active manager and the next two are the peers. right there, they underperformed the index, but outperformed their peers. >> i'd only ask for convertible bonds specifically. it's a very -- the performance of convertible bonds can be diverse and different managers focus in different areas. some bonds trade with not as high of volatility as equities, but similar to equities. while other convertible bonds are bond-like and they don't move much in response to what the equity is doing. this was a period when there was a lot of equity performance and over the last several years. and i think as a group, these 30 odd managers focused on areas

different than what the underlying benchmark did. that's why as a group they underperformed. that's why this manager underperformed the benchmark, but outperformed the peers over that one time frame. >> supervisor cohen: additional request of the staff, if it's possible for us to add the year of the original investment, approval in the memo, just as a little bit full of context and perspective. just the year of investment approval. when do we approve the investment? how long has it been sitting on the books, investment where managers have been under review for a long time. >> yep, very good. >> supervisor cohen: thank you.

>> commissioner driscoll: the under review are way too kind. they're nice people, their performance was poor. you can go to page 54 and see it. there is a reason it's in red. it's a long-term number. that's not your decision, kurt, but i'm bringing the observation, we don't want to embarrass the managers, but we have to talk about the performance and we do it publicly. similar numbers on page 56, the capital guardian number. it just happens to be positive. but that was another group when staff did recommend and i can remind you what you said, but i remember staff recommended terminating capital guardian. i cannot make the case if we had or had not done that, maybe that would be a higher return.

but there is the result. so it's not about simply manager selection, it's about manager monitoring. it's buy, sell. if you want to change the process, we better talk about what has been going on. >> supervisor cohen: i agree. >> for a long time, either we pick up the area underperforming, but it's a good discussion item. is it coming to us? good. ok. >> may. why isn't this one coming faster? >> we've brought it forward over

the years, since i've been director. there has been different approaches to it, but this time we believe that we want to find out what best practice for a plan our size. >> ok. >> and make sure that we document why we would consider making these kinds of changes. i think commissioner driscoll remembers a time when there was a delegation of authority that was removed and now historically there hasn't been a delegation, but we're going to bring the whole process and recommendation most likely to the committee. >> i believe commissioner cohen requested this in the january board meeting. it just takes time for p.c. leading the research effort to gather. they've made a lot of progress. and they're in very good position to bring it in may. >> i would caught you about alluding to historical

perspective unless you want to get it right. i brought this very issue up in the board retreat. it is a huge governance issue, i was asked to wait and be patient while we sort things out. >> that's why we're bringing it forward. we're not going to point to anything historical, we're going to point to what we believe is best practice among plans our size. >> and complexity of the investment. >> ok, it's about the decision-making process which i know i and other staff members have been look at how to do, when to move it. it's a change at the top. >> certainly. the delegation to staff is only in one piece of the private equity portfolio. that's where it was. >> in terms of -- we've been talking about revamping

write-ups and trying to get the information to the board in a format that is easier to glean the things we need to, to make a decision. on the memos, for managers under review, when you guys have time, we can just very simply put in the performance numbers, 1, 3, 5, you have them, but if we put it in a sample table like in the preceding section, it would be easier. >> very good. >> is there any way to get more detail about it? you know, qualitative aspect of the review. we understand performance, but there is a lot behind it. oak tree. we kept with them and i understand why from what i understand howard marks does and has done. but i don't see it in here. if i was a board member and read it, i would say, why have we

kept this person for this many years? there is nothing down there i can understand that. if you could bullet point the main factors. he's made a call to quality and we believe that will be a long-term call energy the school, whatever that is, just like with convert. i think it's helpful. i also want to add, i thought mr. martin's presentation was excellent and mainly because he really went to the pages that mattered and polled us with this large document exactly what we needed and got us to the main points of that. i thought that was good because that was a big document, so thank you for doing that for us. and not walking us through every page. >> along that, you may recall information received when a manager is being recommended.

we see their calendar year numbers. we don't see that anymore. that's the problem with using annualizing 1, 3, 5, 10 numbers. one bad years affects the numbers. usually on recommendations, they're recommended to. think about presenting them, if it's a lot of red years, versus one or two bad years. let alone issues of concentration. >> i think that's good point. i love to see individual year numbers. i find them more insightful than one, three, five. >> they're useful, too. >> i like to take them into context of what is in the market. on review and managers. many times managers will be think being the m.i.t. letter that was sent out, managers in our program that says they have to have five-year, so it's really kicked out teams that

have left and proved to be great after three years. are we going to revisit all the criteria we have with the managers just to get in the search and what allows that to happen? >> yes. >> good, because i know we've done that let's say with the hedge fund, with keystone. where they lifted out within a year, we can put them in and use them. that would technically violate the criteria, so i think we need to revisit that. >> the answer is yes. >> ok. >> any other thoughts, comments, questions from the board? >> seeing none, we open it to public -- >> can i make one comment. there has been a lot of discussion on indexes. a point i did not emphasize, we actually show what you would have earned had you put 60% of your money into a global equity index fund and 40% of your money in a global bond fund. for ten years instead of earning

6% a year, which you did, you would have earned 4.4% a year out of indexing. on the $13 billion you started with, that would have made $4 billion in difference for choosing not to index. >> so if we had gone with the 60-40, we would have lost billions of dollars? >> yes. >> and if we indexed rather than have our own manager, that flies in the face of just having index portfolio? ok. >> thank you. >> we'll open up to public comment. any members of the public that would like to address us regarding managers under review. next item, please. >> i have item 9, proxy report for 2017. >> let me take it as is.

would you like to call 9 and 10? >> yeah, we often do. >> let's call 9 and 10. >> 9 discussion proxy voting report for calendar year 2017. and item 10, review and approval of proxy voting policies for the calendar year 2018. >> we report a summary report on proxies voted. this report provides summary level information on how the retirement system has voted. proxies across two categories, those put forth by management which include election of

directors, appointment of auditors and mergers and those put forward by shareholders, we provide level of information as to how the retirement system voted its proxies on matters related to executive and director compensation. in addition this year, and in response to board request, this report shows percentage of our votes that align with past and failed proposals. so i'll introduce andrew. >> i'm the u.s. head of custom research at iss so our team helps to implement your proxy voting. we've enhanced the report this year showing the proxy voting and how it has affected the vote outcome. we brought in the vote results as well as how you voted on the

topics. i want to provide you with trends around corporate governance to get a sense of how the market is voting, how sfers is voting and give you an idea of that sort of impact that your proxy voting is having. so looking at russell 3,000 companies in 2017, average support for directors was about 96%. it's actually a high watermark, going up every year since 2009. so that is certainly a sign that shareholders are finding directors are fulfilling their fiduciary duties than a higher level in years past. but really where you tend to think about issues around the board of directors is things like the independence of the board, the directors serving on too many boards. these are structural issues and are certainly things you vote against, the reelection of directors for. that said, where you tend to see failed elections or directors receiving high levels of against

votes tend to be on accountability related issue, matter affecting risk oversight or poor response to a prior shareholder vote. when i talk about risk oversight, a good example is milan, this is the manufacturer of epipen. that resulted in federal hearings, congressional hearings and lawsuits. as a result of that, shareholders voted in high opposition to the members of the board, members of the governance committee charged with risk oversight of these matters. in fact, one director at milan failed to receive majority support and they voted against that direct area as well as others. that director failed to receive support, just barely failed to, so shows evidence where your voting is having impact calling out or asking directors to be held accountable for their

actions on the board. moving to the next topic of executive compensation. in the u.s. context, this is primarily in the form of advisory vote on c.e.o. pay. this is nonbinding vote, thumbs up or thumbs down on the prior pay. average support for this proposal was around 9 #%. sfers voted against 1 out of 10, which is in line what you're peers are voting as well. the primary focus is the alignment between the pay and the focus of the company. where you see these proposals failing is misalignment between those two i. going back to milan as an

example, the executive chairman received $100 million in compensation in 2016. this was front loaded pay for his next five years of service on the board, but the shareholder saw a negative return following the epipen pricing controversy, so that disconnect between sizeable compensation grant and negative run for shareholders is where you see the proposals receiving high opposition or failing. the advisory vote received 17% support which was one of the most opposed resolutions in 2017 on executive compensation. moving to the next topic, looking at environmental and social shareholder resolutions. this is another hot button issue. if you had a time line going back over 15 years, looking at average support tore the

proposals, you'd see 15 years ago, average support was in the single digits. fast forward to 2017 and likely 2018, average support for the proposals on environmental and social topics receive on average 22% support. and a number of these received majority support which five or ten years ago was unheard of. in 2017, there were six proposals that received majority support touching on environmental and social issues. three relating to climate change and exxon mobil, ppo corporations. and sfers voted in favor of each of those proposals. what they're focused on is asking the company to report on how they -- what the portfolio impact of 2° scenario would be and how the company was adopting policies or what sort of policies they had in place to address that issue. this was of course -- this has been a hot button issue for a

number of years, something investors have been focused on. the risk on the portfolios. exxon mobil, these are companies you did not see this level of support in the years past. that's really -- i would view that as a change in the mindset among institutional investors, finding there is a financial argument and a real financial risk with not supporting the proposals. as i mentioned before, of course, sfers voted if favor of the resolutions. so that's a direct evidence of your proxy voting affecting how the companies are providing -- being transparent to shareholders and providing shareholders with information. >> that is where owning fossil fuel stock gives you a seat at the table, you can vote for proxies, forcing change, that you otherwise wouldn't be able to effect if you weren't a

shareholder? >> absolutely. >> how much -- i'll take a couple more minutes. high points here? >> sure, actually that wraps up the historical vote in terms of the proxy voting. the other order of business is the updated proxy voting policy for the 2018 changes. so welcome move there item of business. >> president stansbury: any questions on the first part? >> i have one. you mention where public plan voted on the social issues, so overall has that changed year over year given sentiment? >> absolutely, if you look at the trajectory it's only gone up over the years. where there is slight dips is the shareholder proposals evolve and they become more costly on the company, you may see

decrease in support, but across the board you see more and more investors recognizing this sort of information -- again most of these are asking for reports on potential risks and recognizing that is important piece of information for shareholders to have to evaluate their investment. >> thank you. >> president stansbury: why don't we present and open up to the board? i'm sorry. >> proxy voting stuff is in one sense level one. it lays the foundation for level two, which we're hoping to do more of. when people see the votes, when people get together, they start to see, i think of a number, 21 of the climate votes. 21% of people opposed to resolutions, that's a good sign.

the observation, it took a couple of years to get you tell us about not just how we voted, but column 5, it's tricky reading the numbers, they all add up to more than 100%. we don't need to go through it today. but think about whether you can make that clearer going forward. if with a new social policy director, what are we calling the director? this is going to be working hand in with it and you as well. >> we can enhance this more. the intention was to show based on the vote outcome how often you were aligned with the outcome. five proposals that failed, how often did you vote against that? the updates for the proxy voting policy.

there are six changes but i'll trying to simplify them. the first four changes are on the topic of director election. would have complex and this is common among the peers, you have complex set of rules when looking at the board of directors and electing them. the first change is really to strengthen and simplify the policy around poison pills. it allows the company to avoid a potential takeover. what we're doing here is simplifying the policy, saying if a company has a poison pill in the books, with a term of more than one year, you expect them to put that out for shareholder aproox, if they don't, they vote against the members of the board. if the company adopts a short term pill, they'll review that on case by case basis. they may have justification for

doing so. long-term pills you expect shareholder approval, if not, vote against members of the board. the next material change, the second material change to the director elections policy is on excessive non-employ director compensation. when you're talking about compensation, non-employee director pay has gone up year after year. and what we're doing here, or what the proposed changes here is not to punish companies or directors for higher pay, but truly excessive levels. these are multiples of what their peers are receiving. and also not just looking at whether they're doing this one time or one year, but looking for a pattern of multiple years of excessive non-director pay. if this identified, then proposed in the policy where you vote against the members of the

compensation committee for setting this excessive pay and doing so on an ongoing basis. the next two change are i would say less material. i would spend a second sort of summarizing each one. essentially you're codifying positions you're already voting in the policy. being more transparent, stating that companies shut opt out of state laws. this means if there is a state law that requires them to hold elections of just a part of the board each year, so a third of the board being up for election, you would expect the companies to opt out of the state laws. these are limited states, but this is a codification of an approach you already have. the same thing for the next section on problematic pledging for company stock. this is something you already factor in. your analysis of the board of directors and really this is just a codification or being

transparent in terms of stating that you will be evaluating problematic pledging of company stock and potentially vote against members of the board when magnitude of that pledging is exceeded or the company's policies to address that are not adequate. >> are we near the end? >> yeah, two more. so the next update is a new shareholder proposal on gender pay gasp. companies are asked to report on pay broken down by gender and reporting what sort of policies or procedures they have in place to reduce any potential gender pay gap. we saw these three years ago. they're increasing in number and the focus around the issue increasing as well, so we thought it made sense, we would propose you adopt the policy specific to this issue to lay out the framework in terms of how you would evaluate. so on a case by case basis looking at how the company's disclosure compares to peers,

controversies or litigation. that is the framework for the policy here. and the last topic, we touched on this earlier around climate change risk. of course you have a strong policy on environmental related shareholder proposals that you generally vote for. those sorts of proposals but because climate change and climate risk is such a major issue of discussion in many industries, we thought we were proposing a policy that is specifically addressed this issue as opposed to under the general umbrella of environmentally related proposals. your position would be same and you would vote for the reasonable requests. >> thank you very much. >> one question on the

compensation issue. does iss have a rule or mettic they use when the compensation is going to hire officers in the corporation where we don't want it 150 times the lowest level. it's not on a sexual basis -- >> companies beginning this year, companies are required to disclose that. the c.e.o. pay is a ratio to the average worker. but we're look at non-director based. iss doesn't have a single metric or multiple we look at when look at executive compensation, although the magnitude of pay is one input in the screen when we're evaluating c.e.o. pay. we're looking at pay relative to peers and shareholder return and also the magnitude of pay. it's a factor, but it's not immediately result in any sort of adverse recommendations under

the policy. >> well, maybe the link then is when the when sayings committee on the -- compensation committee on the board of directors voting on the c.e.o. and other people's pay, a conflict there. >> thank you. >> commissioner bridges: there is issues and discussions around still dealing with the gender and pay equity gaps around women on corporate boards. and i don't see it as part of this research this year. is the whole issue around the number of women on corporate boards? >> i believe you have a policy addressing board diversity, that's why there is no proposed change. >> and it will continue to be in there. >> yes, i'm looking for it. >> commissioner bridges: i was looking through -- >> it's number 32 on page 11. board of director diversity.

that's an existing policy we're not updating, but we're recommending that the gender pay gap as additional issue. >> commissioner bridges: right, i don't want to lose that part. >> one comment i'll add, six shareholder proposals on environmental and social matters that passed, received majority support in 2017, two or on board of diversity, that is running along side climate change in terms of issue that shareholders are evaluating closely and supporting at record numbers. >> perfect. that's what i wanted to know. >> thank you, please see the gender pay gap issues reflected in this list. i don't know if, andrew, if you know about my personal background, but i'm a member of the san francisco board of supervisors and not too long ago we asked this body, the sfers

board, to consider executive pay and diversity pay in the proxy vote. and this was scheduled to be on this week's finance committee. which did not happen, but with the staff recommendation to move a different committee, is that correct? move it to a different committee? we believe it should be referred to the investment committee -- >> because it's an investment matter? ok. so i guess my question, did you consider executive pay when updating the guides? board diversity is a factor we look at in the contested director elections. as far as uncontested election is a factor, but it's not a specific reason we would recommend for or against the board. looking at just the pay alone,

really the only context it comes up, or for the vote, would be when you're voting on the executive compensation package. so i guess i don't see how we would -- how the diversity pay factors into that quite as much as we're looking at the alignment between pay and performances. >> you conflated what i was saying, i was saying executive pay and/or diversity of boards. two independent concepts that could be on this list of -- i don't know what you call these things -- gender pay, i did not see executive pay. i heard you talk about it. >> executive pay is on page 10. at the top of the page. >> required separate chairman

and c.e.o.? equal access to proxy ballots? i don't -- >> number 6, voting on msop, management on pay proposal. >> i'm looking in the wrong section. >> it's compensation related section. >> ok. you say it was number what? >> number 6 on the top of page 10. >> ok. great you answered my question. i appreciate it. half of it. what about diversity on the boards? >> 32 on page 11. >> great, you answered both. i appreciate it. thank you. >> comments, questions? seeing none, we'll open up to public comment. are there any members of the public who would like to address this proxy voting only? >> every pension in the world

divested from fossil fuels in global warming. we're going to have a global warming for the next 5,000 years. all ice in the world is going to melt. when that happens, sea levels will rise 240 feet. the good news for you members that live on pacific ice, 5,000 years from now, you're going to have beach front property. >> thank you, just a reminder to the comment on fossil fuel, this is comment on proxy voting only. if you would like to discuss proxy voting, step forward. >> david page with climate justice. the vote that got exxon mobil to talk about their fossil fuel and climate change is a step

forward and thanks to the rockefeller family and black rock, i think it is especially, plus our proxy vote, we got them to make this historic report. unfortunately, my understanding of what the report said that exxon mobil produced was minu minimizing the risk related to climate change. and it was not the type of report that a lot of people were hoping for in terms of delineating how much profit will be lost assuming there is a rapid drop in the value of the assets that they have under the ground. i'm hopeful that somehow in the future they'll do better in terms of the reasons for

divestment, instead of having us be at level 2. i figure this is another example of how progress with the results of the emissions going into the air related to these engagements and proxies is too slow and too small. and while i'm up here, i'll say i'm also glad about the progress with gender equity and i hope that continues to move in the right direction. thank you. >> thank you. any other members of the public? seeing none, we close public comment. thank you for your report. >> we need a motion to approve the addition to the policy? >> president stansbury: sorry, i was thinking the first item. is there a motion on the table. >> i move that we approve the additions to the proxy voting policy. >> president stansbury: there is motion, a second.

any discussion? seeing none, take the item without objection. item passes. thank you for the report. just the one action, right? >> right. >> item 11. cio report. >> thank you, board members, we had the first in a long time. year and a half we were down 1.47%. you see the returns on the front page what is not reflected on here is the absolute return program lost 60 basis points which we consider quite good. equal to the bond market and better than the stock market. >> did you say loss or gain? >> it declined 60 basis points. >> i thought you said we made 60 basis points. i thought i said decline. i know david did. david said 60-70.

there is narrative on the returns. they're still north of 9 and today they're at 10% for the fiscal year. economic conditions, one quick note, is that the payroll report was delivered on friday after the publication of this board package. very strong number. the jobs created were 313,000 for the month of february, versus consensus estimate of 2-hundred,000. so very strong number. the january report was revised up from 200,000 to 230,000. this indicates that the economy is quite strong. boyu, this is a much sought after long short manager in china. we requested $100 million. we only got 20. even though this manager we were on top of this, pretty early,

the strategy is only 2.5 years old but it is capital constrained. we're hoping to build a long-term relationship with this manager we consider a strategic partner. pelican energy we requested $50 million. >> this is entertainment and media startup company. previously of dream works and disney. we requested 50 million dollar and we did get 50. we have three open positions, we've made progress on two of them.

i would like to turn to those now and in page 1 of the case report, the returns, strong returns over one, three and five years, the 10 years of 6.2. and comparing very favourably to

a 7030 benchmark. out performing by 2%. we are looking for input. ignore that for now. the last two numbers look out to 2016. you see the rate of return for this 23 year period, 22 and a half period as listed in the above right. you look at the compound rate of return, over the 22 plus year period, we returned 8.16%. and that is where the volatility is 8.25. you see the returns compare favourably to 70, 30 and the risk adjusted returns and standard deviation and the sharp

ratio versus. it is a bunch in the belly in terms of the numbers is -- during the gsb. we are going to go over returns data in the weeks. you see here also in the graphical charts, in the rolling volatility is we had unusual volatility here for the last three years. occasionally it works well and occasionally not. it does not work well... it does work well in the decline. you see here on two occasions we -- only once on a physical