Harvard Money Managers See Salaries Rise

Harvard’s top five money investors earned a total of nearly $55 million for their work with Harvard’s $18.3 billion endowment last year, according to the Harvard Management Company (HMC).

Despite a 2.7 percent decline on the absolute rate of return for the endowment last year, four of HMC’s top five earners received increased compensation compared to their earnings for the last fiscal year.

“The investors outperformed their benchmarks, and that’s the reason their compensation is high,” said HMC President Jack Meyer, who earned $4.1 million last year.

Only the compensation of the highest earner, Jeffrey Larson, declined, leaving the foreign equity investor with $14.8 million, almost $2 million less than he earned during the 1999-2000 fiscal year.

Among the other top investors, fixed-income specialist David Mittelman earned $13.6 million. Phillip Gross, Robert Atchinson and Frank Dunau earned $10.7 million, $9 million and $6.8 million respectively for their work with U.S. equity.

The HMC employees’ compensation reflects a base salary, a lump sum for meeting the benchmark and a performance bonus for exceeding it over a five-year period.

Some members of the Harvard community are critical of the HMC employees’ high earnings.

“It’s not that I begrudge the high pay per se, it’s just that the inequality is troubling,” said Benjamin L. McKean ’02, a member of the Progressive Student Labor Movement, who is also a Crimson editor. “The same University that compensates [the HMC employees] would view the needs of 1,000 working families it employs as inconsequential.”

But Meyer defended the high earnings of HMC employees, saying that external investment managers who performed at the same level as HMC investors would cost Harvard more than twice as much.

“They have added a tremendous amount of value to Harvard,” Meyer said. “Relative to industry standards, it’s a good deal.”

Last year’s decline in the endowment’s average return, compared to the previous year’s 32.2 percent increase, lowered the $18.3 billion endowment’s average return for the past five years to 16.9 percent.

“It was a very harsh environment for returns last year,” Meyer said. “But within that environment, a decline of only 2.7 percent is pretty good.”

Because the HMC is a nonprofit subsidiary of Harvard, it must report the compensations of its five highest-paid employees. Nonprofit institutions using outside investment managers are not required to report these figures.