Compensation Rises for Moneymen, But Remains at One-Fifth of All-Time High

Compensation for managers of Harvard's $35 billion endowment rose this year, but salaries for the highest-paid officials were far lower than the massive pay packages that have drawn criticism in recent years.

The former endowment chief, Mohamed A. El-Erian, earned a total of $6.5 million, according to a University statement released Thursday. His five highest-paid employees at the Harvard Management Company (HMC) earned between $2.1 and $6 million.

Compensation for El-Erian and the five employees totaled $22.3 million this year, up from $13.3 million last year but a marked fall from the $107.5 million compensation in 2003 that was blasted for being excessive for employees of a university.

The figures released Thursday reflected fiscal year 2007—El-Erian's first full year at the helm—which ran from July 1, 2006 to June 30, 2007.

In September, El-Erian abruptly announced his intention to step down from the helm of HMC after just 22 months in office. He was succeeded last month by Harvard Business School professor Robert S. Kaplan, a former vice chairman at Goldman Sachs who will serve as HMC's interim chief during the search for a permanent leader.

Under El-Erian's watch in fiscal year 2007, Harvard's endowment earned returns of 23 percent, ballooning from $29.2 billion to $34.9 billion, even after $1 billion was withdrawn to underwrite nearly a third of the University's operating costs.

The 23 percent growth was the highest Harvard had seen since 2000 and one of the five best returns ever when compared to internal benchmarks. The gains came amid a strong bull market: the Wilshire 5000, a broad index of stocks, gained 19.6 percent over the same period.

Pay packages for endowment officials became a heated issue after two of HMC's top officials, David R. Mittelman and Maurice Samuels, each earned more than $30 million in 2003. When the salaries became public, a group of seven alumni from the Class of 1969 threatened to reduce their donations to Harvard if the University failed to rein in the high compensation.

The highest-paid employee that year besides El-Erian was Andrew Wiltshire, the head of HMC's investments in natural resources, who earned $2.9 million. This year, Wiltshire saw his compensation double to $6 million, the second highest after the CEO.

Mittelman and Samuels were among more than 30 employees that departed HMC in 2005 with longtime CEO Jack R. Meyer to form the Boston-based hedge fund Convexity Capital Management.

The departure of so many top managers made fiscal year 2006 a year of rebuilding.

El-Erian will become co-CEO and co-chief investment officer at Pacific Investment Management Company, the Los-Angeles-based bond specialist where he had previously served as a managing director and overseen investments in emerging markets.

—Staff writer Nathan C. Strauss can be reached at strauss@fas.harvard.edu.