Indiana pension system contracts with conservative anti-ESG firm
Strive co-founder Vivek Ramaswamy paid $4,000 an hour; now running for president
Republican presidential candidate Vivek Ramaswamy speaks during the annual Conservative Political Action Conference (CPAC) at the Gaylord National Resort Hotel And Convention Center on March 03, 2023. (Anna Moneymaker/Getty Images)
Indiana’s Public Retirement System is the first known state pension system to contract with anti-ESG firm Strive Advisory, LLC and its co-founder Vivek Ramaswamy.
The contract, obtained by the Capital Chronicle, is capped at $150,000 — with conservative Republican presidential candidate Ramaswamy set to earn $4,000 per hour for ad hoc work. Industry publication Responsible Investor first reported the contract’s existence after a January public hearing.
Ramaswamy was not running for office when the contract was signed in November 2022. News reports say he has stepped down as CEO to focus on a White House bid.
The contract is part of a crackdown on environmental, social or corporate governmental-based decision-making, dubbed ESG.
“Increased scrutiny on pension fund investment and proxy voting has driven demand for proper pension oversight to an all-time high,” said a project update Strive presented at a February INPRS board meeting.
INPRS told the Capital Chronicle it wanted to “strengthen” its investment policy statement and proxy voting policies, but skeptics expressed concern.
And the firm could stand to gain from contentious legislation now making its way through Indiana’s GOP-dominated General Assembly. Strive didn’t respond to multiple requests for comment.
Hourly rates range from hundreds to thousands
INPRS hired Strive to review its lengthy investment policy statement, which includes its pecuniary interest framework. That involves the system’s external asset managers, and how they make investments and vote on shares on the system’s behalf.
Strive and INPRS drafted a definition of ESG investing and overhauled several pages on non-financial investment considerations shareholder engagement, according to the February board meeting documents.
“Additional consulting services were necessary as the INPRS Board of Trustees and INPRS Staff identified opportunities to strengthen the Investment Policy Statement and applicable internal processes,” spokesman Dimitri Kyser wrote in emailed responses to the Capital Chronicle.
The contract budgets $100,000 for those services, but caps total compensation at $150,000. The document says that INPRS and Strive will agree on “additional project-based fixed-cost proposals” on a “project-by-project basis.”
Ramaswamy, the first consultant listed on the contract, charges an hourly rate of $4,000 for ad hoc services. Two more consultants make $2,000 hourly and two others earn $1,000 hourly. An “optional blended rate” is set at $2,000 hourly and “others” charge $500 hourly.
The rates generated outrage among some.
Indianapolis Rep. Greg Porter — top Democrat on the House’s powerful financial committee — said through a spokeswoman that he was “appalled and disappointed that INPRS decided Mr. Ramaswamy’s hourly rate of $4,000 … was a good use of taxpayer dollars.”
Porter argued Strive’s services were unnecessary.
“I’m not interested in meddling in how INPRS’ asset managers decide to make investment decisions,” Porter said. “That’s their area of expertise – not mine. So long as INPRS’ rate of return is satisfactory, as it currently is, why fix what’s not broken?”
The contract went into effect November 15, 2022 and extends to June 30, but can be renewed. INPRS’ Kyser said the contract is expected to conclude on the original end date.
It’s unclear where Strive’s advising and money management functions begin and end, leading to concerns that its advice could benefit its manager business.
Strive Advisory and Strive Asset Management both live under the parent company Strive Enterprises, a spokeswoman confirmed to industry publication Pensions & Investments.
The contract says that certain employees work for both the advisory and management firms. Strive Advisory President Anson Frericks is also chief operating officer for the management business, for example — and is a consultant listed by name in the contract.
Ramaswamy has stepped down from his executive chairmanship role with the asset management company, according to Pensions & Investments.
But Strive didn’t return further requests for comment on his role in the services being provided to INPRS. And he still owns between 50% and 74.9% of that business, according to filings with the U.S. Securities and Exchange Commission.
The contract also acknowledges that the advisory business “may be asked to advise” INPRS on the same asset managers with which the management business competes — a service the company itself advertised.
“That raises a lot of questions because with all of the other proxy advising services, there’s a firewall,” said Jesse Coleman, a senior researcher at nonpartisan corporate watchdog group Documented.
Strive leaders continued to use the asset management business’ name and logo even in pitches plugging the advisory business to states like Oklahoma, according to communications obtained by Documented.
“It’s pretty interesting when you read those questions and metrics” in the advisory pitches, Coleman said. “Because who passes with flying colors to manage state funds? Well, Strive Asset Management passes.”
INPRS didn’t immediately respond to questions about the lack of firewall.
New bills, new opportunities
Both companies could benefit from a heavily disputed bill nearly tanked by its original price tag.
To comply with new requirements under House Bill 1008, INPRS expects to pay $550,000 annually — $200,000 for custom proxy voting policy and infrastructure, and the rest for additional staff — according to a fiscal analysis.
INPRS didn’t immediately respond to questions about how it awards such contracts.
The bill also pushes INPRS to ensure its asset managers aren’t partaking in ESG investing. Strive’s management company, which bills itself as a “depoliticized investment option,” could also win big.
“One has to wonder whether the hysteria over ESG – in no small part manufactured and fanned by Strive Asset Management and Vivek Ramaswamy – is nothing more than a pretense to grift public retirement systems like ours,” Porter said.
Indiana House Republicans and the bill’s author didn’t respond to a request for comment.
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