Harvard Management Company’s new Chief Executive, N. P. Narvekar, who has announced extensive plans to shake up HMC, will receive nearly $6 million per year for the next three years. This news comes amidst a letter from alumni from the Class of 1981 critiquing HMC’s investment strategies. Their concerns included questioning “why a generous salary is somehow insufficient motivation for fund managers,” echoing a letter from Class of 1981 alumni that last year condemned HMC executive compensation practices as ‘excessive.’ Indeed, Narvekar’s compensation package is among the highest for any endowment chief executive.
Although Narvekar’s compensation is generous, his impressive track record and the importance of revitalizing the endowment justify the expense. With an experienced background, including serving as Columbia’s endowment manager since 2002, Narvekar has already catalyzed hopes of coming success with the changes he has undertaken to bring HMC more in line with competitive peer institutions. Furthermore, his willingness to take such drastic moves affirm the lengths and efforts to which he will go in order to bring about positive change in the University’s finances.
Nor is Narvekar’s pay, relative to recent HMC executives, particularly unreasonable. In 2014, HMC’s previous CEO, Stephen Blyth, received $8 million as HMC’s head of public market, while Jane Mendillo received $14 million for the fiscal year 2014 and half of 2015 as CEO. With the urgency of turning around the endowment ever rising, Narvekar’s compensation package indicates some restraint in exponentially increasing executive pay.
Meanwhile, recent events like the graduate school’s cut in admissions for the coming year underscore the key role the endowment’s success plays in school and student life. The extensive loss in endowment value was cited as the key reason behind the cut, along with the decision to fund House renewal projects with debt. This helps to explain Narvekar’s compensation package, which reflects both the Harvard’s need to attain the best students and the gravity of the task at hand.
Questions remain about whether compensation should be tied to performance, as the Class of 1981 alumni suggest. We agree that this way of aligning incentives and goals seems most logical to produce optimal results. Still, delivering an early vote of confidence could bolster morale and help instill a sense of stability at HMC, and Narvekar’s early actions as CEO demonstrate that the lack of performance incentives has not weakened his drive to instill change. In fact, the vote of confidence might allow him to make the adjustments, however radical, that are necessary to turn around HMC. Regardless, in the long run, linking performance with compensation is advisable.Narvekar’s actions thus far as HMC chief, along with the importance of the success of his mission, warrant the salary he has received. The compensation package can also serve as an enabling sign of support in these critical early stages, though we hope eventually compensation and performance will be strongly bound together. Based off of his strong and encouraging work, we reaffirm our optimism that Narvekar will continue his track record of success.
This staff editorial solely represents the majority view of The Crimson Editorial Board. It is the product of discussions at regular Editorial Board meetings. In order to ensure the impartiality of our journalism, Crimson editors who choose to opine and vote at this meetings are not involved in the reporting of articles on similar topics.