Although President Richard Levin was the second-highest-paid Ivy president, his $779,000 salary places him below the three Yale employees who earned over $1 million in 2004, up from two in 2003, according to University tax forms obtained by the News.
The two top-paid University employees were Chief Investment Officer David Swensen and Senior Director of Investments Dean Takahashi, who are both responsible for managing Yale’s $18 billion endowment. The next three top earners, excluding Levin, were School of Medicine professors David Leffell, Thomas Rutherford and Richard Edelson. Leffell is also Associate Dean of Clinical Affairs and Edelson is the director of the Yale Cancer Center.
Levin was the fourth-highest-paid University employee in 2004.
Most of the compensation of the two highest-paid employees consists of incentive-based bonuses they receive in addition to their base salaries, Levin said. Swensen’s and Takahashi’s pay is mostly determined by the performance of the Yale endowment, which typically posts higher annual returns than its peers. The Yale endowment increased by $3 billion, or 22.9 percent, last year.
The compensation committee of the Yale Corporation makes the final decision on what Swensen and Takahashi are paid based on Levin’s recommendation.
Swensen and Takahashi, who made $1.64 million and $1.04 million respectively in 2004 — including benefits — are paid far less than their counterparts at the Harvard Management Company, which is charged with investing the $29 billion Harvard University endowment. The top two HMC employees were paid $18 million and $16.9 million in 2004, but unlike Harvard, Yale outsources the direct investment of its endowment to external managers whose compensation it is not required to report. In a January speech, Swensen publicly criticized Harvard for overpaying its internal managers.
Swensen did not immediately reply to requests for comment, and Takahashi declined to comment.
The salaries of medical professors are set by Dean of the School of Medicine Robert Alpern. Their bonuses are based on a formula that takes into account the number of procedures they perform each year.
Alpern said the high pay of some medical professors must be competitive with other institutions to ensure that they stay at Yale and do not go elsewhere or into private practice.
Levin said many of the medical school faculty bring in much more revenue to the University than the amount they are paid.
“They are only making a fraction of the revenue they are bringing in from their clinical activity,” he said. “Their earnings are completely linked to how many operations they perform.”
Many members of the medical school faculty accept lower salaries in order to work in an academic setting, Leffell said.
“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.”
Edelson declined to comment and Rutherford could not be reached.
Leffell earned $1,004,173, Rutherford earned $759,183 and Edelson earned $705,646, including benefits, in 2004.
The University is required by federal law to disclose the compensation of its officers and the top five salaried employees who are not officers.
The three members of the compensation committee are Roland Betts ’68, Theodore Shen ’66 and William Miller ’78. Betts and Shen were unavailable for comment, and Miller told the News last week that he would not comment about compensation because he only recently joined the committee.