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Yale's Swensen Paid $3.7 Million for Running Endowment in 2008

Yale University, home to the top- performing endowment, paid Chief Investment Officer David Swensen $3.7 million in 2008, less than the five top-earning money managers at Harvard University.

Swensen’s compensation included $781,570 in salary and a bonus of $2.9 million, according to tax documents filed this month by Yale. That was a 31 percent increase over 2007. Andrew Wiltshire, the fifth best-paid endowment manager at Harvard, made $3.9 million in 2008.

Yale’s endowment stood at $1 billion when Swensen took over in 1985 and had climbed to $22.9 billion by June 2008. In the next 12 months, the financial crisis led to record investment losses, layoffs and project delays at U.S. universities. Yale’s investments fell 25 percent, leaving the fund at $16 billion.

“His compensation reflects the significant contribution he has made and continues to make to Yale,” Tom Conroy, a spokesman for the university in New Haven, Connecticut, said today in an e-mail. He said Swensen declined to comment.

Yale’s endowment gained an average of 12 percent in the decade ended June 2009, compared with the 8.9 percent return at Harvard, in Cambridge, Massachusetts, the wealthiest U.S. school, and the 3.9 increase by the Standard & Poor’s 500 Index.

Swensen, 56, pioneered an investing style that helped endowments beat market indexes by relying on assets such as commodities, real estate and private equity. Some of those hard- to-sell holdings fell more than public stocks and bonds following the collapse of the U.S. housing market in 2007.

‘Spectacularly Well’

Swensen’s investment model has worked “spectacularly well,” Richard Levin, Yale’s president, said in an interview last year. The endowments of Princeton University, in Princeton, New Jersey, and the Massachusetts Institute of Technology, in Cambridge, are managed by Swensen protégés Andrew Golden and Seth Alexander, respectively.

Yale invests the bulk of its money with outside managers, except for the 4 percent of assets allocated to bonds, which are overseen inhouse. Harvard, which has assigned 30 percent of its portfolio to internal managers, has been expanding that team for more flexibility and control over its fund.

John Longbrake, a Harvard spokesman, declined to comment on the differences between Harvard and Yale compensation.

Swensen is eligible to receive an additional $1.5 million in deferred pay, an amount which may rise or fall based on the performance of Yale’s investments, according to the tax filing.

Dean Takahashi, Swensen’s senior director for investments, was paid $2.4 million in 2008 and is eligible for $1 million in deferred compensation, the filing shows. Levin received $1.2 million in salary, bonus and other compensation, and deferred pay was $328,250.

Harvard’s highest-paid manager in 2008 was Stephen Blyth, then the managing director for international fixed income. Blyth, who was promoted last year to the head of internal portfolio management, received $6.4 million. Jane Mendillo, who became president and chief executive officer of the Harvard Management Co. in July 2008, was paid $999,114 for her first six months.

To contact the reporters on this story: Oliver Staley in New York at ostaley@bloomberg.net; Gillian Wee in New York at gwee3@bloomberg.net

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