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 university's 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 Cambridge, Mass.-based university's $32.7 billion endowment, employed 324 people in 2012, 19% more than in 2009, the filings showed.
“We are astonished by what we discovered,” nine members of the class of 1969 wrote in a letter to Harvard University 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.
The university's endowment operation is different from most schools because it has a larger staff doing internal trading, while others use money management companies.
“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 Harvard, said Wednesday 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.
In 2010, the university said it would alter compensation, tying senior management pay to the entire fund's performance while reducing bonuses if there were negative returns. It said more than 90 percent of the pay was tied to returns and that bonuses often reflected several years of gains and losses relative to a benchmark.