Yale’s endowment may have shed nearly a quarter of its value last year, but three of the men charged with managing it earned a combined $10.1 million in salary and benefits during the same time period, according to the University’s most recent tax filings.
As they have been for the past several years, Chief Investment Officer David Swensen GRD ’80 and his second-in-command, Dean Takahashi ’80 SOM ’83, were the two highest-paid employees at Yale in the 2008-’09 academic year, with investments director Alan Forman coming in fourth. Third on the list was University President Richard Levin, who, with $1.5 million in salary and benefits, made about a quarter more than he did the year before.
Swensen’s salary and benefits totaled $5.3 million last year, almost a quarter more than the $4.3 million he earned in the 2007-’08 academic year. His deputy, Takahashi, took home $3.5 million, a 35 percent raise from the year before.
What the filings do not make clear is how much exactly the investments officers took home in 2008-’09, since their compensation includes deferred bonuses they will be paid in the future as well as past deferred bonuses they have now been paid.
Takahashi declined to comment for this story. Swensen and Forman did not respond to requests for comment, and Levin could not be reached because of the Jewish holiday.
The Internal Revenue Service form shows that the bulk of Swensen and Takahashi’s earnings come from bonuses and incentives, which Yale doles out based on the long-term performance of Yale’s endowment. In the fiscal year ending in June 2008, the endowment grew just 4.5 percent. The result was disappointing after performance in previous years, when Yale’s endowment regularly jumped more than 20 percent in a single year, but the figure looked good a year later when the endowment fell by 24.6 percent during the fiscal year ending in June 2009.
The two men’s bonuses were based on the endowment’s long-term performance prior to last year’s disastrous negative returns. Future bonuses for Investments Office employees will reflect last year’s losses. (Facing a $300 million budget gap, University officials postponed major construction projects, cut back on spending across Yale and laid off nearly 5 percent of its staff.)
But those same University administrators — who have defended Swensen’s strategy over the past year even as he remained quiet — say that while Swensen may be paid well, it is Yale that has benefited the most from his time here. At $16.3 billion, the most recent figure available, the endowment is still worth much more what it was when Swensen came to Yale in 1985: $1 billion.
On Wall Street or even at other universities, they say, the several million Swensen makes yearly would be a pittance for an investor as renowned as he is. Endowment managers at Harvard have earned as much as $35 million recently, dwarfing Swensen’s and Takahashi’s pay.
“Here’s a guy who could make 10 times his salary,” former deputy provost Charles Long said of Swensen last April. “But his goal is to make as much money as he can for Yale.”
Rounding out the top five with nearly $1.2 million in salary and benefits was David Leffell ’77, deputy dean of clinical affairs at the School of Medicine, CEO of the Yale Medical Group and a professor of dermatology. Leffell did not respond to a request for comment.
Like the investments officers, Leffell and other clinical professors could be making much more working outside of Yale, in private practice, School of Medicine Dean Robert Alpern said. Besides, he added, clinical faculty salaries come out of the School of Medicine’s clinical income, not Yale’s general budget.
“We need to pay appropriate salaries or we will not be able to attract and retain the best physicians,” Alpern said. “The faculty members generate the funds that pay their salaries and frequently generate more than that.”
Alpern reviews and ultimately approves medical school faculty salaries, which are first determined within their respective departments.
According to the tax filings, the three-person Compensation Committee of the Yale Corporation, the University’s highest governing body, is responsible for recommending Levin’s salary. His base pay was $965,077 last year, with bonuses, benefits and other compensation adding $564,931 for a total of about $1.5 million.
Federal law requires nonprofit organizations including Yale to disclose how much its officers and five other highest-paid employees have earned. Not including Levin, the University’s officers — its provost; general counsel; secretary; and vice presidents for development, finance and business operations, New Haven and state affairs and campus development, human resources and administration, and West Campus planning and program development — earned an average of $464,567.38 in the 2008-’09 academic year.