Pay and Chief Investment Officers: Good Money while It Lasts

06 / 20 / 2020
Download this post as a PDF file
by Charles Skorina | Comments are closed

In this letter, we highlight the compensation of one hundred chief investment officers at US university endowments.

Endowment investment chiefs are the ultimate long-term, strategic investors.

They have an infinite investment horizon, a global playing field, and can invest in anything anywhere – within the broad policy limits set by their institution.

Their performance is a bellwether for what’s prudent and possible.

We recruit these executives for a living and avidly follow all institutional investment heads managing assets over $1 billion (and many with less), tracking their performance and pay, and scrutinizing their abilities.

Foundations, family offices, and Wall Street firms also employ top investment professionals, but it’s difficult to extract meaningful data on compensation or performance from opaque sources.  So, we go with what we can get.

When it comes to pay, size matters

Nonprofit investors wear many hats but have essentially one metric by which they are judged; long-term performance.  However, that does not seem to be the metric for how they are paid.

We ran some correlations using our archival data-sets to see how pay correlates to AUM, tenure, and five-year performance.

As shown below, the correlation coefficient for AUM to comp is 0.69, which is moderately high.  But, tenure and performance don’t appear to have much impact on CIO pay.

There are some outliers, like Paula Volent at Bowdoin, a consistent top performer and deservedly well paid, managing an endowment with less than $2bn AUM.  But, in most cases, size trumps all other metrics.

Comp-vs- AUM:   0.69

Comp-vs-Tenure: 0.31

Comp-vs-5yr Rtn: 0.27

In the larger corporate world CEO pay is an object of great interest and controversy for obvious reasons.  But the relationship of size to compensation looks just like what we see in our set of endowment CIO data.

Kevin Hallock at Cornell University is one of the go-to experts in this field.  He’s chair of their department of Labor Economics and director of their Institute for Compensation Studies.  In papers with his students and colleagues he’s studied CEO pay for many years.

He says: It doesn’t matter whether company size is measured as assets, market value, sales revenue or number of employees — bigger firms pay more … way more.”

“We can isolate the impact of all kinds of other characteristics (e.g., industry, return on assets, profitability, research and development expense, etc.) and even use complicated statistical techniques to remove the influence of “unmeasurable” characteristics, and the size-to-pay link remains intact.

The bottom line.  Be it Wall Street, Main Street or nonprofit institutions – the bigger the assets, the better your chances at making more money.

It’s that simple.

And now, on with the show

COMPENSATION: TOP 100 CHIEF INVESTMENT OFFICERS

AUM

FY19

($bn)

CEO / Pres / CIO

Institution

Base

Comp

CY2017

Bonus +

Other

CY2017

 Total Pay Calendar Year 2017

1

 11.27

Malpass, Scott

Notre Dame

$1,075,834

$8,931,278

$10,090,221

2

 39.43

Narvekar N. P. “Narv”

Harvard

$999,464

$8,252,322

$9,251,786

3

 30.31

Swensen, David F.

Yale

$843,954

$3,489,796

$4,333,750

4

 10.95

Holland, Peter

Columbia U

$977,515

$2,789,476

$3,766,991

5

 26.12

Golden, Andrew

Princeton

$920,242

$2,705,242

$3,625,484

6

 8.61

Triplett, Neal F.

Duke U

$634,492

$2,915,154

$3,549,646

7

 27.70

Wallace, Robert F

Stanford

$985,292

$2,284,092

$3,269,384

8

 1.74

Volent, Paula J.

Bowdoin College

$1,753,380

$1,006,701

$2,760,081

9

 14.70

Ammon, Peter H.

U Pennsylvania

$850,478

$1,803,706

$2,654,184

10

 8.26

Schmid, Mark

U Chicago

$711,839

$1,423,678

$2,135,517

11

 12.45

Lundberg, L. Erik*

U Michigan

$720,000

$1,280,000

$2,000,000

12

 7.33

Miranda, Kenneth

Cornell U

$757,375

$1,164,365

$1,921,740

13

 10.95

McLean, William H.

Northwestern U

$863,176

$1,018,210

$1,881,386

14

 17.57

Alexander, Seth

MIT

$708,930

$1,164,275

$1,873,205

15

 4.35

Jacobs, Kathleen E.

New York U

$681,187

$833,000

$1,514,187

16

 1.43

Crigler, Jeremy

Tulane U

$397,000

$985,000

$1,382,000

17

 3.67

King, Jonathon C

U North Carolina

$656,960

$715,444

$1,372,404

18

 2.29

Falls, Amy C.

Rockefeller U

$558,250

$714,525

$1,272,775

19

 2.50

Gorence, Douglas J.

U Minnesota

$521,824

$726,681

$1,248,505

20

 5.81

Thacker, Allison

Rice U

$559,929

$659,856

$1,219,785

21

 2.94

Ferguson, Keith

U Washington

$1,200,600

$1,200,600

22

 3.98

Dowling, Joseph L. III

Brown U

$600,000

$594,738

$1,194,738

23

 1.82

Barry, Michael K.

Georgetown U

$485,689

$669,930

$1,155,619

24

 11.80

Bachher, Jagdeep

U Calif Regents

$652,454

$490,985

$1,143,439

25

 5.73

Mazzocco, Lisa

U So. Cal

$658,895

$447,065

$1,105,960

26

 2.30

Hunnewell, Clarissa

Boston U

$646,730

$423,112

$1,069,842

27

 1.71

Hille, James R.

Texas Christian U

$587,465

$420,107

$1,007,572

28

 1.30

Walker, William D.

Baylor College of Medicine

$480,000

$525,209

$1,005,209

29

 1.99

Smith, Daren

U of Toronto

$989,308

$403

$989,711

30

 2.52

Zona, John J.

Boston College

$578,090

$409,170

$987,260

31

 6.27

Hall, Anders W.

Vanderbilt U

$753,528

$178,850

$932,378

32

 1.83

Reeser, William S.

U of Florida

$541,442

$358,313

$899,755

33

 6.28

Perlioni, Jason,

Johns Hopkins U

$383,993

$515,000

$898,993

34

 1.84

Harkins, David

UC San Francisco

$482,939

$403,187

$886,126

35

 30.96

Harris, Thomas B. (Britt)*

UTIMCO (U TX/ TX A&M

$310,727

$554,165

$864,892

36

 0.72

Kudravetz, Douglas

American U

$858,448

$858,448

37

 2.98

Richland, Scott H.

Caltech

$522,182

$323,140

$845,322

38

 1.41

Agatone, Kristin

Lehigh U

$421,251

$350,618

$771,869

39

 1.47

Walter, Keith

U of Delaware

$422,676

$346,090

$768,766

40

 1.44

Gallo, Samuel N.

U Sys Maryland Fdn

$416,962

$347,930

$764,892

41

 1.00

Martin, Anne

Wesleyan U

$442,211

$295,426

$737,637

42

 2.24

Phillips, Douglas W.

U Rochester

$703,254

$28,338

$731,592

43

 0.97

Dineen, Anne

Hamilton College

$392,086

$337,920

$730,006

44

 2.35

Ellison, Ellen

U of Illinois

$455,101

$242,742

$697,843

45

 3.15

Van Cleave, Julie M.

U of Wisconsin

$541,861

$150,201

$692,062

46

 3.15

Warren, Nicholas

Brandeis U

$639,313

$31,750

$671,063

47

 5.73

Ruth, Alice

Dartmouth College

$579,866

$88,273

$668,139

48

 5.26

Lane, John C.

Ohio State U

$650,004

$650,004

49

 1.02

Kerrigan, John

Santa Clara U

$500,348

$145,422

$645,770

50

 1.87

Dungan, Sally M.

Tufts U

$377,767

$267,003

$644,770

51

 2.54

Kennedy, Charles A.

Carnegie Mellon U

$331,901

$309,312

$641,213

52

 1.31

Webb, R . Brian

Baylor U

$326,998

$306,538

$633,536

53

 1.36

Ward, Daniel A.

Virginia Tech

$412,007

$188,524

$600,531

54

 0.94

Thayer, Jainen

Oberlin College

$384,422

$184,013

$568,435

55

 2.17

Kuenster, Deborah

Wellesley College

$557,339

$2,064

$559,403

56

 1.66

Dahiya, Rakesh

Southern Methodist U

$402,679

$136,585

$539,264

57

 1.00

Hiestand, Brian

College of William & Mary

$531,586

$531,586

58

 0.94

Watters, James H.

Rochester Inst of Technology

$477,051

$26,276

$503,327

59

 1.82

Kraich, Rick

West Virginia U

$312,960

$166,936

$479,896

60

 1.37

Johnson, Bradley J.

U of Oklahoma

$266,986

$207,620

$474,606

61

 0.94

Namyet, Jay D.

U of Oregon

$469,281

$469,281

62

 1.28

Kulczycki, Gitta

U of Alberta

$394,435

$66,670

$461,105

63

 1.71

Silgardo, Rajiv

U of British Columbia

$427,268

$17,890

$445,158

64

 0.89

Pippin, Jeffrey

Pepperdine U

$378,041

$62,406

$440,447

65

 1.45

Scheer, Karl

U of Cincinnati

$438,600

$438,600

66

 2.47

Geissler, Mauricia

Amherst College

$432,096

$2,838

$434,934

67

 0.87

O’Donnell, Hugh

Colby College

$335,457

$92,800

$428,257

68

 1.39

Mason, Stuart

U of Minnesota

$404,000

$404,000

69

 0.83

Bohrer, Joseph

Lafayette College

$347,975

$44,028

$392,003

70

 0.88

Jacobson, Raymond A.

Davidson College

$367,843

$20,595

$388,438

71

 0.87

Floyd, James

Claremont McKenna College

$349,378

$37,242

$386,620

72

 0.95

Hope, Joseph S.

Colgate U

$384,063

$384,063

73

 2.49

Stratten, Gary A.

Indiana U

$241,977

$130,388

$372,365

74

 0.76

Tidwell, Ryan

Oklahoma State U

$269,701

$101,448

$371,149

75

 3.03

Zecher, Philip

Michigan State U

$370,000

$370,000

76

 1.48

Macdonald, Jason

Rutgers U

$309,000

$34,535

$343,535

77

 2.09

Wall, Ben

Texas A&M

$274,484

$67,986

$342,470

78

 1.32

Barrett, Tim

Texas Tech U

$340,900

$340,900

79

0.77

Martin, Gary

Macalester College

$333,152

$1,520

$334,672

80

 0.79

Jarry, Timothy

College of the Holy Cross

$330,227

$216

$330,443

81

 1.74

Richards, Thomas

U of Missouri

$325,000

$325,000

82

 1.04

Barker, Craig

U of Arizona

$283,078

$26,440

$309,518

83

 2.15

Amstutz, Mark C.

Swarthmore College

$308,657

$308,657

84

 0.54

Emery, Janice

American U Cairo

$304,753

$1,390

$306,143

85

 0.54

Grosner, David

Lebanese American U

$302,360

$302,360

86

 1.12

Dahnert, Stephen

Vassar College

$287,074

$774

$287,848

87

 1.14

Janiec, Donna M.

Queen’s U

$282,192

$310

$282,502

88

 1.82

Clarke, James

Kansas U

$268,212

$10,000

$278,212

89

 0.53

Casel, Michael H.

Haverford College

$277,647

$277,647

90

 1.40

Peloquin-Dodd, Mary

North Carolina State U

$268,225

$268,225

91

 2.00

MacDonald, Bruce

Virginia Commonwealth U

$267,500

$267,500

92

 0.79

Shaver, Marlene

UC San Diego

$259,705

$5,000

$264,705

93

 0.77

Alexander, John C., Jr.

Clemson U

$226,291

$37,552

$263,843

94

 1.41

Shupp, Todd

U of Kentucky

$250,000

$250,000

95

 0.51

Cox, Lois

Kansas State U

$240,237

$276

$240,513

96

 0.69

Kapoor, Kristopher N.

Furman U

$192,223

$40,120

$232,343

97

 2.63

Cooper, David

Purdue U

$214,261

$328

$214,589

98

 0.88

Gibbons, Jonathan

U Massachusetts

$199,042

$199,042

99

 1.44

Neale, Brian

U of Nebraska

$172,072

$12,215

$184,287

100

2.32

Wallace, David

Pomona college

$151,120

$151,120

 

Why is compensation reported for CY2017 while assets are reported for FY2019?

Most of our compensation numbers are publicly available as long as you are willing to dig for them.  Private schools and some publics disclose them in IRS 990 filings.  The hitch is the long time-lag – more than two years – before the data is publicly available.  In this case, calendar year end 2017.

The AUM numbers, on the other hand, are for FY2019.  In each case we use the latest data available.

The corresponding data for many public schools (those without parallel foundations) is often fresher, but it’s scattered among various and often quirky databases in various jurisdictions with various disclosure rules.

Caveats aside, this report should give boards, CEOs, and CIOs a useful set of benchmarks as they consider what to pay their key investment executives.

Pay for performance? It’s complicated

Our comp curve is very steep.  The median pay for the 100 CIOs on our list is only about $643 thousand.  That’s much less than the mean, which indicates a lop-sided distribution with a few high-earners supporting the almost-$1 million average.

Per our chart, the average CIO among our gang-of-100 makes a bit less than $1 million, all in.

But this is less impressive than it seems because of the extreme range between top and bottom and variance in comp among more or less equivalent institutions.

Mr. Malpass for example, number one on our chart, is one of the most senior CIOs in the industry and delivers consistently excellent returns.

But, Mr. Swensen is also long-tenured and, as we all know, has produced excellent returns for decades.

Yet Mr. Malpass earned double Mr. Swensen’s pay while managing a fund about one third the size.  ($11.3 billion vs $30.3 billion as FY 2019).

We have no explanation for this apparent mis-match except that those are the bargains Malpass and Swensen have struck with their respective boards.  They are private institutions and can spend their money as they think best.

Moreover, Mr. Malpass’s $10 million is sixty-six times what Mr. Wallace, a polished up-and-comer makes for managing $2.3 billion at Pomona College.  Yet Notre Dame’s AUM is only about ten times as much as Pomona’s.  Go figure!

There’s more than one way to manage the money

The all-in cost of an internal investment office is much more than just the CIO comp.

This explains why about a third of the schools in the $500 million to $1 billion range and most under $500 million AUM use a different management model, relying on a board and board-committee buttressed by (well-paid) external professional advisors.

Many of the under one-billion group earn respectable returns, especially if they can entice smart investment experts to work for free in service to their alma mater.

This also explains the burgeoning number of schools using an outsourced-CIO (OCIO) model, which we frequently report on in our newsletter.

Notes:

Britt Harris: CEO and CIO, UTIMCO

Our chart reports compensation for CY 2017.  That’s the basis for almost all our numbers (per 990s for FY2018).

However, Harris signed his employment contract on June 15, 2017.  So, his W2 pay was adjusted to reflect the six-month period 15 June to 31 December 2017. Thus:

Base: $310,727

Bonus: $550,000

Other: $4,165

Total: $864,852

This explains why his comp appears to be too low and why IRS filings are not always straightforward.  In subsequent years, we expect UTIMCO to report about $1.5 million.

Erik Lundberg: CIO, University of Michigan

U of Michigan is one of the few big public schools without a parallel foundation managing its endowment.  As such, it’s not required to file Form 990 with the U.S. Treasury.  So employee pay is not readily available.

However, media outlets filed FOIA requests in Michigan and courts required the school to give up some of Mr. Lundberg’s comp data under protest.  UM conceded that he would be paid about $2.0 million in CY2017.

We print that number as a close approximation.  It remains to be seen whether the school will be more forthcoming re CY2018 and subsequent years.

Joseph Dowling, CEO (former CIO), Brown University

Mr. Dowling was promoted to CEO of the investment office six months after the end of 2017 calendar year.

Ms. Jane Dietze has succeeded him as CIO and we’ll be reporting her as CIO going forward.

Download this post as a PDF file