Compensation for managers at the biggest college and university endowments frequently doesn't square with the performance of their funds, according to a Bloomberg survey of wages and raises for top endowment executives.
Ranking 62 endowments for the three years ending in 2013, the news agency found that only half of the managers in the top 25 percent for pay achieved returns that were also in the highest quartile. Then-Harvard endowment CEO Jane Mendillo's compensation nearly doubled to $9.6 million in 2013, a year in which the university had the lowest return of the eight Ivy League schools.
Ge Bai, an accounting professor at Washington and Lee University in Virginia who studies compensation, called the apparent decoupling of pay and performance "alarming," but consultants who help institutions set wages for fund managers said top schools are competing with Wall Street for talent and need to pay accordingly.
A Slate business columnist suggests that it is time to start taxing the biggest college endowments. Jordan Weissmann cites research showing that institutions such as Harvard and Yale, with tens of billions of dollars sitting in investment funds, get far greater per-student subsidies in the form of tax breaks than state colleges do in direct government funding.