A group of Harvard alumni that has previously criticized the university for the huge amounts it pays its endowment managers is redoubling their complaints after overall compensation for managing the endowment more than doubled over the last three years.
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According to public tax records, Harvard Management Co. paid out $132.8 million in salaries, bonuses and benefits for the year ending June 30, 2013, a staggering 110% increase from $63.5 million paid in 2010. The gargantuan increase in pay cannot be explained by growth, as Harvard Management, which supervises the $32.7 billion endowment, had 324 employees in 2012, only 19% more than in 2009.
Statement from Harvard alumni group
“We are astonished by what we discovered,” the Harvard alumni group wrote in a letter to Harvard President Drew Faust. Bloomberg News review a copy of the letter dated August 20th. 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,” the letter continued.
David Kaiser, a member of the class of 1969 who was one of the authors the letter, said they hadn’t received a response from the university yet. The letter did note, however, that the class of 1969 is scheduled to meet with the president in September as part of its 45th reunion celebration.
Statement from Harvard Endowment
Disconcertingly, the university has refused to address the issues brought up by the alumni group, and instead has issued a vague and misleading reply. Christine Heenan, a spokeswoman for Cambridge, Massachusetts-based Harvard, claimed in a statement sent by email on Wednesday that “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.”
Turnover among Harvard endowment management
Jack Meyer, the long-time CEO of the Harvard endowment, resigned a few years ago under public pressure when news of two traders receiving annual compensation of more than $35 million each surfaced.
Jane Mendillo, who has been the chief executive officer of Harvard Management since 2008, is also resigning. She had been working to rebuild the firm’s internal trading operations after the downsizing following Meyer’s departure. Mendillo announced early this summer that she is planning to resign as CEO at the end of the year.