A group of alumni that has previously criticized Harvard University for how much it pays its endowment managers is again finding fault after compensation more than doubled in three years at the investment arm.
Harvard Management Co. paid $132.8 million in salaries, bonuses and benefits in the year ended June 30, 2013, up from $63.5 million in 2010, according to tax filings. The company, which oversees the university’s $32.7 billion endowment, employed 324 people in 2012, 19 percent more than in 2009, the filings show.
“We are astonished by what we discovered,” nine members of the class of 1969 wrote in a letter to Harvard President Drew Faust. Bloomberg News obtained a copy of the letter dated Aug. 20. Compensation is “increasing at a much faster rate than the endowment, which still has a long way to go before it reaches its pre-crisis peak,” they said in the letter.
Harvard, with the world’s largest university endowment, is still seeking to recover from a 27 percent investment loss from the credit crisis. The value of the endowment fell from a peak of $36.9 billion in 2008 to $26 billion in the year ended June 30, 2009. It posted an 11.3 percent investment gain last year, trailing Ivy League peers including the University of Pennsylvania, which reported a 14.4 percent increase, and Yale University, which had a gain of 12.5 percent.
The university’s endowment operation is different from most schools because it has a larger staff doing internal trading while others use asset-management companies.
$1.5 Billion Saved
“HMC’s unique hybrid model has saved the university more than $1.5 billion in management costs compared to what an equivalent external management strategy would have cost over the past decade,” Christine Heenan, a spokeswoman for Cambridge, Massachusetts-based Harvard, said today in an e-mailed statement.
Members of the class of 1969 have been critical of the compensation at Boston-based Harvard Management since 2003 when the university disclosed that its five highest-paid endowment employees got a combined $100 million in one year, including about $35 million each for two traders. The controversy prompted some alumni to threaten to withhold donations and preceded the departure of Jack Meyer, who ran the endowment for 15 years.
Nonprofit institutions such as Harvard are required to disclose total compensation to staff as well as to their highest-paid employees in publicly available tax filings.
Compensation Strategy