A professional “headhunter” will be handed the task of finding a new chief for the state’s pension fund, its overseers decided yesterday, firmly shutting the door on state Treasurer Tim Cahill makingthe pick himself.
Cahill’s candidate for the job withdrew Saturday, complaining that the process had become politically and racially charged. That prompted Cahill to stop insisting that he should pick the next fund manager and to agree to work out a hiring process with the board.
In a related development, the Pension Reserves Investment Management board also accepted the resignation of James Hearty, the fund’s current executive director, pending the appointment of a successor.
Hearty vowed to leave despite one director’s plea to stay.
“I’d rather keep you here,” board member George McSherry told Hearty, who won praise from other directors. “I’d rather have you reconsider and withdraw your resignation. Then we don’t have to go through all of this.”
But Hearty said his decision was firm. He said he had planned to leave next March when his three-year contract ends.
Yesterday’s actions marked a relatively peaceful move forward after nearly two months of turbulence at the top of the state pension system following Cahill’s move in August to oust Hearty.
Cahill, the pension board’s chairman, said then that he had enough votes on the nine-member PRIM board to install his choice of Steven Weddle. Weddle, who ran a venture investment fund in southern Africa, had no experience running a big pension system.
Several board members – as well as Gov. Mitt Romney – wanted a more open process to replace Hearty. Yesterday, the critics got what they wanted.
Cahill, in brief remarks on the issue, said he heard “loud and clear” that the process should be an open one.
The board’s administration committee will start looking for an executive search firm next week, with a goal of hiring one by mid- November, said Robert Brousseau, who heads the panel. He said he expects more than one finalist to be presented for interviews by fund directors.
This marks the first time that a national search will be conducted for pension chief, he said.
Cahill, who has questioned the cost of an outside search, supported the move yesterday.
“Hopefully, we’ll limit the cost to the pension system,” said Cahill deputy Doug Rubin. “We want to try to do this as cost- effectively as we can, but we also want to make sure we bring in the right person.”
The board also voted to hire New England Pension Consultants, of Cambridge, as an adviser for the fund’s plunge into relatively risky hedge funds. As part of a sweeping change to the fund’s asset mix this summer, the board voted to invest – for the first time – up to 5 percent of pension assets in hedge funds.
The Cambridge firm will be paid $800,000 for the first year of service – more than other finalists for the contract would have charged.
