Granted, other endowment funds did equally badly that year, but David Swensen, the endowment fund’s Chief Investment Officer (and second on our list of worst endowment officers), got paid $5.3 million for that, in the academic year of 2008 – ’09.
Other top officers earned a ton, too.
Swensen’s salary and benefits totaled $5.3 million last year, almost a quarter more than the $4.3 million he earned in the 2007-’08 academic year. His deputy, Dean Takahashi, took home $3.5 million, a 35 per cent raise from the year before.
$5.3 million for horrible returns is explained as follows by Yale’s administrators:
On Wall Street or even at other universities, they say, the several million Swensen makes yearly would be a pittance for an investor as renowned as he is. Endowment managers at Harvard have earned as much as $35 million recently, dwarfing Swensen’s and Takahashi’s pay.
Sorry, guys, but that’s a bit unfair. Hedge fund managers make money depending on the returns they bring in. Swensen’s -28% returns at a hedge fund = you’re not getting paid much that year. At a Wall Street firm, it probably means you’re fired. Or close to it.
And by the way, Harvard’s endowment chief just posted pretty great returns for the year through June 30th 2010, 11%. Should be fun to see what Swensen has to follow that one. Yale’s fund should report their 2009 returns soon.
(To be fair, Swensen has, on average, been paid vastly less than he would have made in the private sector or at almost any other large endowment. And if you’re going to invest as aggressively as he does–a strategy that is the source of Yale’s excellent long-term returns–you have to expect to get clobbered once in a while).