Pay for Performance

Harvard Management Company's president, Jack R. Meyer, and its five best-performing portfolio managers earned compensation totaling $41.1 million for the fiscal year ended June 30, 1999--about 10 percent less, in the aggregate, than for the prior year. The compensation, which is heavily weighted toward bonuses based on performance in excess of market benchmarks, declined for all of the recipients except Jeffrey Larson, a newcomer to the top-five list, who manages foreign equity investments. During the fiscal year, Harvard's investment returns trailed its benchmarks by a wide margin, but the core domestic and foreign equity and bond portfolios continued to perform very well (see "When Down Is Up," November-December 1999, page 80). Accordingly, the best-compensated managers are all involved in investing funds within those categories. For HMC's bonus-eligible personnel as a whole, compensation was "a bit lower across the board," Meyer says. As reported, the weak performance was concentrated in private-equity investments, primarily external venture-capital funds, where overwhelming investor demand kept Harvard from committing as much money as planned.