McMorgan, a New York Life Investment Management subsidiary that manages some $26 billion in union pension fund assets, first contacted the 54-year-old Szente in mid-September through an executive search firm. But Szente, who had joined CalPERS in early 2000, wasn’t all that interested in leaving his high-profile perch. “Dan told us early on, ‘Frankly, this is something that is happening a little earlier on than I would’ve wanted it,’” says Paul Morton, McMorgan’s COO. “But he found the job sufficiently intriguing that we kept talking.” That’s where timing helped McMorgan. Szente was embroiled in a dispute with California state Controller Kathleen Connell, a CalPERS trustee, over pay raises he wanted to give the fund’s internal portfolio managers. Connell had sued to stop the raises, and a California court ruled in her favor in late October. By last month a frustrated Szente was ready to call it quits and cut a deal with McMorgan, which he says will “substantially” increase his own pay. (Szente earned $432,757 last year.) Ironically, one thing McMorgan really liked about Szente was his experience dealing with pension trustees like Connell. Says Morton, “We wanted someone who was bright and experienced and who could communicate effectively with boards.”
