Yale Investments Office czar David Swensen GRD ’80 received a $1.1 million raise in 2005, increasing his salary to more than three times that of University President Richard Levin, according to Yale’s most recent federal tax filings.
Swensen, who earned $2.7 million, was among three Yale employees with a paycheck over $1 million. Levin’s 2005 salary of $869,000 was only fourth-highest on the University’s payroll, although it was the highest among presidents of Ivy League schools.
Swensen’s deputy, Dean Takahashi ’80 SOM ’83, earned $1.7 million, and School of Medicine professor David J. Leffell made $1.2 million, according to the filings obtained by the News. Following Levin were gynecology professor Thomas J. Rutherford and dermatology professors Jennifer McNiff and Earl Glusac, all of whom earned more than $700,000.
Swensen and Takahashi’s salaries are tied to the long-term performance of Yale’s endowment, which grew a nation-leading 28 percent last year, to $22.5 billion.
Levin said the large raises were the product of the Yale Corporation’s decision several years ago to revise the compensation structure for the Investments Office after Harvard and Stanford universities both lost their top investment officials to the private sector.
“The compensation committee, after doing rigorous research on compensation practices at other non-profits, concluded that significant increases were warranted,” Levin said. “Their performance,” he said of Swensen and Takahashi, “is truly extraordinary.”
Still, their pay pales in comparison to those of their counterparts at the Harvard Management Company, which oversees Harvard’s $34.9 billion endowment. Harvard’s highest officials have earned as much as $35 million in recent years.
Yale, on the other hand, outsources the direct investment of its endowment to external financial managers, whose pay is not reported on mandatory tax filings.
The compensation for Yale medical school professors is determined by Robert Alpern, the school’s dean. Alpern said the highest-paid professors typically generate much more money in revenue for the medical school through their clinical work than they earn in pay.
And without competitive salaries, Alpern said, the medical school risks losing top specialists to the alluring pay found in private practice.
“They’re actually earning less at the medical school than they would in private practice,” Alpern said. “The issue is how much of a difference they can tolerate. That’s the challenge in trying to get them to stay.”
In an interview last year, Leffell said that although medical school professors could generally earn more in private practice, many do not want to make the sacrifice teaching.
“In general, faculty salaries are lower than what they could get in private practice … [but faculty] value the opportunity to be in an academic environment,” he said. “The academic mission is a primary motivator.”
Leffell declined further comment Wednesday night.
Still, while faculty may be able to earn more in the private sector than in academia, their pay is Yale’s single largest expense.
Of the University’s 2007-2008 expenditures, 56 percent will go toward faculty and staff compensation, according to University budget projections provided to the News. At the School of Management, 69 percent of the school’s $49.7 million in spending this year will go toward salaries.
Levin, meanwhile, is now the highest-paid Ivy League president, according to fiscal year 2006 tax filings reported Monday by the Chronicle of Higher Education. His 14-year tenure in the Ivy League is the longest of any current president.
Levin’s salary is recommended by the Yale Corporation’s three-member Compensation Committee and must be approved by the Corporation. Levin declined to comment on his salary Monday night.
The president received an 11.6 percent raise over his 2004 salary. Swensen’s raise was more than five times that — almost 65 percent.
Through an assistant, Swensen declined to comment for this article, and Takahashi, Rutherford and McNiff did not return phone messages Wednesday. Glusac was unavailable for comment.
Federal law requires non-profit organizations like Yale to annually disclose the compensation of its officers and its five highest-paid employees who are not officers. Aside from Levin, Yale’s six other officers — the University’s secretary, general counsel, provost and vice presidents for New Haven and state affairs, development and finance and administration — earned an average of $380,000 in the 2005 calendar year.
Overall, Yale spent $1.2 billion on salaries and benefits for the equivalent of 11,400 full-time faculty and staff positions in the 2006 fiscal year, according to a University financial report. The average employee earned $105,000 in total compensation, according to the report.