At the Top of Their Game

Unfazed by critics, Harvard's endowment managers toast to another stellar year

Sarah M. J. welch

Jack R. Meyer, president of the Harvard Management Company, chats with a receptionist just inside the front door of the firm’s 16th-floor offices in the Federal Reserve Building in downtown Boston.

A vulture looms over the trading floor of the Harvard Management Company—a stuffed, toy vulture.

It first appeared atop an employee’s desk in 2002, amid a bitter dispute with an external fund manager who called the University a “vulture investor.”

But two years later, the predatory bird is still perched above the trading floor, an oddly iconic image for the guardians of Harvard’s $22.6 billion nest egg, the largest endowment in higher education.

As the University’s official investment firm, charged with maintaining the school’s greatest source of income, the management company is perhaps Harvard’s most vital and yet most controversial arm. While recent returns—21.1 percent last fiscal year—have drawn the envy of Wall Street, critics continue to assail Harvard’s aggressive investments, not to mention the multi-million-dollar salaries paid out each year to its top endowment managers.

But if the criticism has taken any toll on the firm’s 175 employees, it hardly shows.

“Everybody’s happy,” Jack R. Meyer, the management company president, said in an interview last month, prompting an incredulous grin from across the table. Everybody?

“Well, yeah,” he said, “everybody.”

Several visits to the management company’s offices in Boston over the past two months appeared to confirm at least the thrust of Meyer’s assessment. The management company, however embattled, is still a world-class investment firm at the top of its game. And with a 10-year record essentially unparalleled among institutional investors, Harvard’s endowment managers clearly have cause for their contentment.

The mood was particularly jubilant this summer as the staff gathered on the trading floor—next to the vulture, no less—to celebrate another round of stellar returns at the management company’s “Fiscal New Year’s Party,” according to Meyer’s accont. Feasting on tubs of ice cream, they turned to their boss, who as a surprisingly short man for such a financial giant, stood atop a desk to lavish what has become annual praise upon his managers.

For the third time in 10 years, every portfolio managed by the firm—from domestic equity to emerging market bonds—had outperformed its benchmark. That would mean more money for the University, of course, as well as more money for Meyer and his top endowment managers, with seven- and eight-figure bonuses for many at the top of the firm’s payroll.

But under Meyer’s performance-based compensation system, which he first instituted upon his arrival in 1990, everyone at the management company—from accountants to secretaries—had reason to celebrate. They, too, would enjoy a modest bonus in honor of the University’s windfall.

On the 16th floor of downtown Boston’s soaring Federal Reserve Building, the staff of the Harvard Management Company, ice cream in hand and checks in the mail, toasted to a job well done.


The management company’s trading floor, a methodical array of flat-panel monitors and mini televisions tuned to CNBC, is largely dormant on typical trading days. Though the firm is responsible for roughly 250,000 transactions a year, according to Meyer, work on the floor is conducted in library voices—even whispers, when a reporter is present—a far cry from the popular image of frantic traders hollering orders and scrambling for phones.

“We require a lot of good thinking,” explains Meyer, “and a lot of yelling and shouting isn’t conducive to that sort of thinking.”

When the management company renovated its trading floor in 1998, Meyer sought to construct a room which would appear “light and cheerful but not opulent,” a curious distinction for the home of one of the richest endowments in the country.

But while the money at stake is enormous, the firm’s offices maintain a strictly casual air. Polo shirts and sweaters far outnumber suits and ties, even among the most senior portfolio managers. One afternoon in October, David R. Mittelman, Harvard’s star manager of domestic bonds who earned $25.4 million for his work last fiscal year and $34.1 million the year before that, rocked back in his chair on the trading floor, sporting khaki pants and a short-sleeve, collared shirt.

In a small concession to opulence, the walls of the management company’s main floor—they have three in all—are adorned with artwork, most of it modern, on loan from the avant-garde DeCordova Museum in Lincoln, Mass. Meyer’s office, furnished with his own items, features an impressive reproduction of Pablo Picasso’s “Interior With a Girl Drawing.” (The original is on display at the Museum of Modern Art in New York.) His windows look out onto the breathtaking expanse of Boston Harbor.


Meyer is just the second president of the Harvard Management Company, having succeeded Walter M. Cabot ’55, who served from the firm’s founding in 1974 through 1990, just as Harvard’s investment returns began to slide.

After weathering an initially bumpy start at the firm’s helm, which then-University President Neil L. Rudenstine said in 1992 was the result of “enlightened stupidity,” Meyer has clearly found his groove. Over the past 10 years, his average rate of return has been a staggering 15.9 percent.

But Meyer is not a portfolio manager. “My primary job is to find the right people and put them in the right spot,” he says.

Meyer is currently in search of the right person to place in the spot vacated this summer by Jeffrey B. Larson, who managed foreign equities for the University. In the interim, a conspicuous cluster of desks on the trading floor, where Larson and his staff of 14 used to work, lies empty in their absence. Larson left the management company this summer to start his own hedge fund, Sowood Capital, backed in part by Harvard’s money.

Meyer—who has two children, Justus S. Meyer ’05 and Halsey R. Meyer ’07, at the College—says his job has changed gradually in his 14 years at the management company.

In the 1990s, Meyer made frequent trips to China, Russia and Latin America and even considered opening a satellite office in London. Now his job is more grounded in Boston, with his staff making those trips for the firm.

He is the only employee of the management company who sits on the firm’s board of directors, which also includes James F. Rothenberg ’68, the University treasurer, Ann E. Berman, vice president for finance, and Jay O. Light, the Robinson professor of business administration, among eight others.

And increasingly, Meyer’s job description has included chief spokesman, having been granted considerable leeway from the University to respond to press inquiries. The management company is the only arm of the University which is not directly overseen by a press office, and unlike most of Harvard’s top administrators, interviews with Meyer are not monitored by the Harvard News Office.

“I suppose what it came down to,” Meyer explains, “is that there are many activities at HMC that the outside world is very interested in. And really, the only people who can talk about those things are HMC employees.”

Still, the University also may wish to maintain some degree of distance from the management company and its corporate environment. When Cabot, Meyer’s predecessor, launched the firm in 1974, he said his objective was to operate “at an arm’s length” from the University.

And though they work just five miles from campus, under the school’s name and with the school’s dollars, Meyer and his staff are still, 30 years later, a long way from Harvard Yard.

—Staff writer Zachary M. Seward can be reached at