John Harvard's Journal
Past and Present Presidents
William Jefferson Clinton spoke to an overflow crowd in the Gordon Track and Tennis Center on November 19, emphasizing the importance of caution in an age of worldwide interdependence. The students and others huddled on the track floor listened closely as Clinton assured them that democracy would ultimately prevail over terrorism. "Terrorism has a very long history," he said, "but in spite of this long history, no terrorist campaign has ever succeeded." At the close of the 40-minute speech, Ryan FitzGerald '02, captain of the undefeated football team, presented the former president with a football signed by the team and a personalized Harvard football jersey. Clinton playfully tossed the ball to President Lawrence H. Summers, formerly Secretary of the Treasury on Team Clinton, who fumbled it.
To accommodate its proposed new 10-story, $100-million clinical research facility, Brigham and Women's Hospital has joined Harvard and a Mission Hill neighborhood community group in a complex land-swap agreement. Harvard is selling 31 houses to the Roxbury tenant group, and the hospital is transferring several buildings and lots as well. In return, the tenants have allowed six of their buildings to be moved, vacating the needed site while securing a low- and moderate-income residential presence in a neighborhood constantly challenged by the nearby academic and medical institutions.
Harvey V. Fineberg, dean of the School of Public Health from 1984 to 1997 and then Harvard's provost until last June 30, has been appointed president of the Institute of Medicine, effective this July 1. Fineberg had been a candidate to succeed President Neil L. Rudenstine. The institute, chartered in 1970 by the National Academy of Sciences, enlists its 1,429 members from the health professions to advise the government on matters ranging from vaccines to nutrition, cancer prevention, and veterans' medical care. A member of the institute since 1982, Fineberg has chaired a committee on risk management, his academic field, and led committees that produced institute reports on HIV prevention, global health issues, and the adverse effects of pertussis and rubella vaccines, among others. Fineberg and his wife, Mary E. Wilson, an infectious-diseases specialist and associate professor at the medical and public-health schools, will relocate to Washington, D.C.
Even as interest in public service has revived, and as Harvard generates large surpluses (see page 64), the Kennedy School of Government (KSG) needs to pull in its reins. Dean Joseph S. Nye Jr. announced in a "state of the school" address November 27 that the school was heading for a $3-million deficit--about 3 percent of its $113-million operating budget for the academic year. To economize, the school will consider closing its Washington office, and may restrain junior faculty hiring and pursue administrative savings. Sponsored research accounted for 34 percent of the KSG's revenue in fiscal year 2001, a figure topped only by the medical and public-health schools. The KSG also had by far the fastest rate of revenue growth among the University's schools during the past decade, so it may need to address the adequacy of funds to cover overhead.
Two alumni received Nobel Prizes this year: A. Michael Spence, Ph.D. '72, and William S. Knowles '39. Spence, who had been professor of economics and then professor of business administration, served as dean of the Faculty of Arts and Sciences from 1984 to 1990 before decamping to serve as dean of the Graduate School of Business at Stanford; he shared the economics prize for his work on information theory. Knowles, retired after a long career at Monsanto Company, in St. Louis, shared the prize in chemistry for work on catalyzing reactions involving the separation of chiral (mirror) forms of molecules.
Up in a Down Year
Harvard Management Company's (HMC) performance-based compensation system produced another round of significant earnings by the top endowment fund managers. For the fiscal year ended June 30, 2001, when the net return on investments was -2.7 percent, five senior investment professionals received compensation of more than $5 million: Je!=rey Larson (foreign equities), $14.8 million; David Mittleman (fixed income), $13.6 million; and from the U.S. equity portfolio, Phillip Gross ($10.7 million), Robert Atchinson ($9 million), and Frank Dunau ($6.8 million). HMC president Jack R. Meyer, M.B.A. '69, earned $4.1 million.
The compensation figures reflect HMC's formula of a modest base salary; a lump sum if the manager matches the applicable benchmark of market performance for his class of assets; and then significant bonus payments tied to "value added" relative to the benchmark. The latter figure is dually constrained: the payout is deferred, and is contingent on continued outperformance--if results deteriorate in future years, the bonus is forfeited. The top managers in the most recent compensation report beat their benchmarks handily. Larson's five-year annualized return was 23 percent, versus 3.8 percent for his benchmark. Mittleman's portfolio earned an annual return of 15.8 percent, nearly twice the market return. And the Gross-Atchinson-Dunau team earned 19.3 percent annually over the five-year period, well ahead of the 14.7 percent market return. In the aggregate, HMC reported, the five fund managers generated absolute investment returns of $4.9 billion during the past five years--nearly half of which reflects compounded "value added" over market returns. (The endowment totaled $18.3 billion at the end of the fiscal year.)
HMC maintains that internal management costs less than half of what it would pay for comparable external investment services. In recent years, with the migration of several professionals from HMC to set up shop on their own--where they can hold equity in their businesses, and keep their compensation private--the share of endowment funds managed internally has declined to 60 percent, with the rest overseen by outside investment firms.
If five issues of the Harvard Crimson each week provide too little Harvard news coverage for your taste, you can now access a full five decades' worth of Cambridge's only breakfast-table daily. The newspaper's digital archive, which was announced last summer (see "Brevia," September-October 2001, page 73), has yielded its first fruits: a redesigned website (www.thecrimson.com) and access to past issues as far back as the 1950s. Work continues to post all 128 years of Crimsons on-line, in a searchable form--a goal the electronic archivists were hoping (as this issue went to press) to achieve by the end of 2001.
A new classroom building at Harvard Business School, named in honor of Beverly Ruth Eddy-Hawes and Rodney A. Hawes Jr., M.B.A. '69, will be ready for use by April. With four 98-seat and four 68-seat classrooms, Hawes--which with Aldrich Hall and Baker Library completes a long-envisioned quadrangle--will bring unprecedented flexibility and new technology to HBS classrooms. The $20-million project represents HBS's largest investment in classroom space since Aldrich was built in the 1950s.
Humanist honored. The Andrew W. Mellon Foundation launched a new program of support for the humanities by granting distinguished achievement awards to five scholars, among them Stephen J. Greenblatt, Cogan University Professor. Greenblatt is a leading practitioner of the "new criticism" and a prominent Shakespeare scholar (see "Anthologizing as a Radical Act," July-August 1998, page 38). The awards, worth up to $1.5 million, are administered by each scholar's institution, and will defray salaries, research costs, and the expenses of colleagues who collaborate with the recipients.
Light luminary. Lene V. Hau, McKay professor of applied physics and professor of physics, has been awarded a $500,000 MacArthur Foundation Fellowship, recognizing her work in slowing, stopping, and restarting beams of laser light shone through clouds of supercooled matter (see "Light at 38 M.P.H.," May-June 1999, page 15).
Elite educator. The University of Louisville Grawemeyer Award in education has been conferred on Martha L. Nussbaum, Ph.D. '75, now Freund Distinguished Service Professor of law and ethics at the University of Chicago, for her book, Cultivating Humanity: A Classical Defense of Reform in Liberal Education. Nussbaum, who receives $200,000, was a junior fellow before receiving her doctorate, and a Radcliffe Institute fellow in 1981.
Acclaimed anthropologist. Arthur M. Kleinman, Presley professor of medical anthropology, professor of psychiatry, and head of the department of social medicine, received the American Anthropology Association's Boas Award for exemplary service to the discipline, recognizing especially his transforming work in medical anthropology.
Prize parodist. Alice Randall '81, whose novel The Wind Done Gone, a parody of Gone With the Wind, withstood litigation by the Margaret Mitchell estate before it could be published, was one of four winners of the Al Neuharth Free Spirit Award, conferred by the Freedom Forum. The four will share $1 million.