HMC Salaries Fall From Highs

Before top money managers left the company this year, their pay fell below $20M

The multimillion-dollar salaries of Harvard’s top money managers declined in their last full year of work before they left to form their own fund.

Former bond managers David R. Mittelman and Maurice Samuels were paid $18 million and $16.9 million, respectively, for their work at Harvard Management Company (HMC), which invests the endowment. Jack R. Meyer, the firm’s former president, received $6 million for the fiscal year that ended June 30, 2005.

The University disclosed the salaries on Dec. 21, the first day of winter break for undergraduates.

The performance-based salaries dropped off from past highs. Manager pay exceeded $35 million in fiscal 2003 and $25 million in 2004 amid extraordinary endowment returns.

The copious compensation was a lightning rod for criticism from some alumni and students, including several alumni from the Class of 1969 who blasted the system as inappropriate in letters to University President Lawrence H. Summers. Harvard officials defended the system but eventually capped the managers’ maximum pay in March 2004.

William A. Strauss ’69, one of the alumni who signed the letters, assailed Harvard last month for paying managers multimillion-dollar salaries as it continues to raise tuition above the rate of inflation.

“We think we should have a very large public discussion about the endowment and how Harvard is using it,” Strauss said. “The endowment should be managed for the benefit of current and future generations of students, not for the benefit of current and future generations of fund managers.”

Managers at HMC receive a base salary of $400,000 and a bonus that is tied to how their portfolio performs relative to a benchmark measuring market performance. The system also includes a “clawback” provision, which withholds part of the earnings dependent on future returns.

University officials have indicated that the compensation plan is here to stay under the firm’s new chief, Mohamed A. El-Erian, who will take the helm early this year.

“The board has discussed this issue, and the board is completely committed to continuing to provide compensation for outstanding performance at HMC at levels that will enable us to attract the most talented people,” Summers said in an interview in October.

Including Meyer, the top six managers earned $56.8 million in total, down from $78.4 million in fiscal 2004. Timber investor Andy Wiltshire was paid $5.9 million, while bond managers Shawn Martin and Matt Early earned $5.4 million and $4.6 million, respectively.

All of the top six, with the exception of Wiltshire, left last year to start their own hedge fund, Convexity Capital Management. The University plans to invest in the new fund.

—Staff writer Nicholas M. Ciarelli can be reached at

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