(May 22, 2013) - The top earner at Harvard Management Company (HMC) made almost $1.3 million more than his boss, President and CEO Jane Mendillo, in 2011, according to fund documents.
Andrew Wiltshire, HMC's head of alternative assets, pulled down a $6.61 million paycheck for the calendar year, a release from the endowment manager said. Stephen Blythe, who leads public markets investments, was the fund's second-highest paid employee at $6.16 million. Mendillo earned $5.32 million for the year.
According to HMC, over 90% of portfolio managers' compensation hinges on investment performance-Harvard pays for alpha. If a certain portfolio does not beat its benchmark, the manager in charge can only collect 10% of his or her potential payout.
"This system ensures that incentives are earned only when the endowment receives added-value from HMC's active management," the Ivy League investor explained.
Total compensation for the top six employees rose 45% from 2010 to 2011. HMC called the latter calendar year a period of "exceptionally strong endowment returns."
Not all of the investment gains posted in 2011-nor any other year-made their mark on employee's year-end compensation figure. HMC reserves a portion of performance-based earnings, which are subject to "clawback" should a manager underperform in subsequent years.
"This compensation system is designed to closely align the interests of the University with its investment professionals," said James Rothenberg, Harvard University's treasurer and HMC's board chairman. "HMC's market-beating performance in the reporting period once again added value to the resources upon which Harvard depends to fulfill its teaching and research mission."
In addition to the top three, other top earners at the investment office included natural resources specialist Alvaro Aguirre-Simunovic ($5.30 million) and global fixed income portfolio managers Apoorva Koticha ($3.11 million) and Marco Barrozo ($2.99 million).
Related Profile: Jane Mendillo, President and CEO, Harvard Management Company