MIT's Endowment Chief Delivers Better Returns for Lower Pay

(Bloomberg) -- Seth Alexander, who runs the Massachusetts Institute of Technology’s endowment, has produced long-term returns that beat many of his rivals. Yet, he was compensated less.

Among the 10 wealthiest private schools, MIT bested eight of nine endowments in the five years through June 2017. Alexander received a $2.1 million pay package in 2016, ranking him at the bottom. The 10 had an average $4.3 million package, according to data compiled by Bloomberg using the schools’ most recent tax filings. The schools either declined to comment or didn’t respond to requests for comment.

One competitor Alexander didn’t surpass was David Swensen, the longtime investing chief at Yale. Swensen is credited with training managers including Alexander and those at Stanford, Princeton and the University of Pennsylvania.

Pay packages include salary, bonuses, benefits and deferred compensation that pay out in future years. As a result, deferred compensation can get double counted because they are reported again in the year the manager receives the pay.

Compensation is for calendar year 2016 while the fiscal-year tax returns cover 12 months through June 30, 2017, or Aug. 31 for Stanford and Northwestern. Bloomberg requested the returns through the schools. The forms are filed to the Internal Revenue Service each spring and lag a year.

Here’s the 2016 compensation packages for the 10 endowment chiefs:

• Harvard: Stephen Blyth received $6.8 million for six months through June 2016 at the $37.1 billion endowment. He departed for personal reasons after 18 months on the job and was replaced by Narv Narvekar, who came from Columbia.
• Notre Dame: Scott Malpass has been CIO of the $11.8 billion endowment since 1989. Package: $6.2 million. Adjusting for deferred compensation, the university said the package would be $4.5 million.
• Princeton: Andrew Golden has led the $23.8 billion endowment since 1995. Package: $5.5 million.
• Yale: Swensen has been at the helm of Yale’s $27.2 billion fund since 1985. Package: $4.7 million.
• Columbia: The university reported a $4.3 million package for Narvekar. He was replaced as CEO in October 2016 by Peter Holland, who had previously been CIO of the $10 billion investment management company.
• Duke: Neal Triplett has been president of the management company since 2007. The university’s $7.9 billion fund is the smallest endowment among the 10 private colleges. Package: $3.9 million.
• Stanford: Robert Wallace has been CEO of Stanford’s $26.9 billion endowment since 2015. Package: $3.5 million.
• University of Pennsylvania: Peter Ammon has been at the helm of the $12.2 billion endowment since 2013. Package: $3.2 million.
• Northwestern: William McLean has been CIO at the $10.5 billion endowment since 2002. Package: $2.8 million.
• MIT: Alexander has been president of the $14.8 billion fund since 2006. His package included $649,208 in base pay, a $1.1 million bonus and $355,546 in other compensation.

The Massachusetts Institute of Technology Investment Management Co., based in Cambridge, has a unique structure. MITIMCo has two investment teams, including the Cambridge Real Estate Team and the Global Investment Team. It’s a structure not seen at MIT’s peer institutions. The Cambridge Real Estate Team has its own managing director, Steven Marsh, who received a $1.8 million pay package in 2016.

Endowments and pensions are competing for talent with the private sector. The California Public Employees’ Retirement System, the largest U.S. pension with about $355 billion in assets, voted on June 19 to offer its next CIO as much as $1.8 million a year. The salary would be more than double the compensation for the outgoing CIO.

“If he wanted to move somewhere, he could make double,” Edward Fowler, a managing director for asset management at recruiting firm RSR Partners, said about Alexander.

--With assistance from Michael McDonald.

To contact the reporters on this story: Katrina Lewis in Boston at klewis128@bloomberg.net;Kristy Westgard in New York at kwestgard1@bloomberg.net

To contact the editors responsible for this story: Margaret Collins at mcollins45@bloomberg.net, Mary Romano, Josh Friedman

©2018 Bloomberg L.P.