BISMARCK (North Dakota Monitor) — The North Dakota State Investment Board on Friday delayed approval of roughly $1.3 million in bonuses to 12 Retirement and Investment Office employees intended to reward strong performance of the state’s investment funds.
Seven of the bonuses exceed $100,000, with the top one exceeding $293,000. If the bonuses are ultimately accepted, it would be the first time the agency awards them.
Bonus pay is common in other states’ investment programs, said Retirement and Investment Office Executive Director Jodi Smith, though the agency didn’t implement the pay structure until 2024.
It introduced the new compensation plan to encourage investment managers and other staff at the Retirement and Investment Office to bring in more money for the state. The Legislature gave the agency the authority to create the pay program in 2023.
The Retirement and Investment Office invests state money on behalf of the State Investment Board, some of which is managed by in-house investors. The top four funds are the Legacy Fund, the Public Employees Retirement System, the Teachers Fund for Retirement and Workforce Safety and Insurance.
Smith said offering bonus pay helps make jobs at the agency attractive, and incentivizes employees to make as much money for North Dakota as possible.
“We’re not here to support a typical state agency,” she said.
Joe Nankof, right, a senior consultant for NEPC, a Boston-based firm, speaks to the State Investment Board during a meeting on Nov. 21, 2025. (Photo by Michael Achterling/North Dakota Monitor)
For employees to get the bonuses this year, the State Investment Board’s top four funds had to exceed certain earnings benchmarks between July 1, 2024, and June 30, 2025.
The benchmarks are meant to represent standard market performance, Smith said, so that employees are only rewarded if the state’s investments do better than average. Employees can also get additional bonus pay based on individual performance. Smith noted that a third-party consultant was hired to set the performance benchmarks.
The funds outperformed the benchmarks by more than $191 million.
Compared to that sum, a roughly $1.3 million reward for employees is a “modest and reasonable payout,” Smith wrote in a Friday memo to the State Investment Board.
According to Smith, most other states dole out bigger bonuses.
The bonuses don’t come from taxpayer money, they’re funded by earnings on the agency’s investments.
Most of the 12 employees recommended for bonuses are eligible for awards of up to 50% or 75% of their salaries, according to the memo. Top officials can receive up to 90% or 100% of their annual pay.
If the awards are approved, the largest bonus — $293,280 — would go to the chief investment officer, representing 94% of their annual salary of $312,000. The second highest bonus would be $170,726 to the deputy chief investment officer, who has a salary of $197,600.
Smith is not among those up for a bonus this year, since she only became the permanent executive director of the Retirement and Investment Office in June, she said. She said she will be eligible for a bonus in the future.
The State Investment Board on Friday delayed voting on the approval of the bonuses to address some unresolved legal questions raised by board members, Smith said. A board member had asked a question about the state law that created the bonus pay program and legal staff did not have the time to answer it before the meeting, she said.
Gov. Kelly Armstrong, chair of the State Investment Board, said Friday he has some reservations about the bonuses. He said he thought the state intended for it to be more difficult for the funds to meet their investment benchmarks.
Still, Armstrong said he doesn’t want to “pull out the rug” from underneath employees who were promised bonus pay.
Office of Management and Budget Director Joe Morrissette also said he has concerns about the program. Morrissette voted against adopting the pay plan in 2024 when he was on the State Investment Board as a Public Employees Retirement System appointee.
He said that the Bank of North Dakota and North Dakota Mill also offer employees bonuses, but that they’re not as large as those proposed by the Retirement and Investment Office. Other agencies can offer performance bonuses of $1,500 annually, he added.
“Generally, bonuses are very limited in state government,” said Morrissette, who still serves on the board as Office of Management and Budget director.
Morrissette said that while he supports offering the bonuses to investment managers, the awards are also available to some employees in more administrative and operational roles. He said he’s not sure that’s fair when people in similar positions in other state agencies don’t get those kinds of bonuses.
The State Investment Board on Friday also voted to keep working with a consulting firm, Funston Advisory Services, on a plan to restructure the State Investment Board.
The firm in a presentation to the board highlighted that the Retirement and Investment Office is under-staffed compared to similar state agencies, among other findings.
Smith pointed to this as another reason why her staff deserves the bonuses. She said it’s noteworthy that the state’s funds made so much money given the agency’s staffing constraints.
“Despite all these things that are kind of stacked against the agency, they’ve still been able to succeed,” Smith said.
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