For the fiscal year ending in June 2009, Yale’s endowment fell 24.6 percent. In that same time period, Chief Investment Officer David Swensen’s salary and benefits totaled $5.3 million, up from $4.3 million in ’07-’08. Some people think this is an outrage. Today University administrators explained the rationale behind Swensen’s package.
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.”
That’s right! HE COULD’VE LOST SHIT TONS OF MONEY FOR SOMEONE ELSE, OKAY? But he did it for Yale because he loves Yale. Now do the haters get it? Swensen shouldn’t be lambasted, he should be praised and maybe had a building named after him or something. To that end, does anyone know of this place Charles Long speaks of, where one can get a gig as an investor and earn “ten times” Swensen’s measly $5.3 million for this kind of job? Because I know some guys looking for a 2 & 20 situation where performance doesn’t count against you and I’d like to put them in touch. Thanks in advance.
fortress – but you have to take calls in the night
Ah, how about anywhere with $10+B under management…..
“Past performance is no guarantee that you will make an ass-ton of money in the future.”
- guy who reads the entire prospectus carefully
you are 100% correct; it is a major shit show over at Fortress. they are f-ing thieves!!
Swensen’s secret weapon? A self-aware computer named the STAR of David.
Yeah but he gets to live in New Haven. Beat THAT-
“Past performance is no guarantee that you will not be paid an ass-ton of money in the future.”
Words to run money by.
Ground Zero Mosque ≥ Yale
SAC managers’ contracts have “down-and-out” clauses: lose 5 percent from your peak assets, and SAC can take away half of what remains. Suffer a 10 percent loss, and you’re out.
Well the endowment is currently at $16.3B, which before a 25% loss would be about $21B. Essentially, they would have saved a billion if they had paid him $4B to come in and try to nail his secretary instead of making investments.
I believe that is frowned upon at Yale.
But probably okay at Brown, Penn State or Rutgers.
Chump change
5%? that is not much leeway for a daily swing
You can’t compare long only guys to hedge funds. Long only guys get paid on relative return, name one long only guy that didnt lose money in 2008. Not saying this is right, but ALL long only guys get paid for losing money. Ridiculous but investors keep giving money to these clowns.
Drury is out, but the Booberies are not…..quite a downer for a Friday afternoon.
Bill ‘Pimpin’ Gross is long only and prints money.
Living in New Haven is the new killing it
-Guy who went to HS in Wallingford
I have plenty of “endowment” to go around.
-J. Holmes
In equities? Challenge
When I walk around the streets of New Haven, people talk about me like I’m a dog.
- D. Swenson
Choate blows goats ;D
Uh… a great deal of their account was probably tied up in things that are/were illiquid or that he otherwise couldn’t get out of (i.e., minimum cash levels for payroll and maintenance). It’s not like the guy came in with $21 bil in cash at the start and blew through $5 bil solely on his lack of secretary banging.
Your idea may work with your $50 etrade account, but it hardly applies with a $21 bil endowment fund.
PIMCO All Asset Fund -15.9% 2008
PIMCO has never been long-only.
-5% is an endless wipeout when you’re trading on “asymmetric” information. -5% should not occur.
My etrade account is down to $40 on the year anyway.
And what would you know about being endowed?
50+ or 5+?
Oh I get it now. I was supposed to read the fine print.
Don’t be silly. Look at all the Private Equity managers that got paid well in 2008-09, and all the HFs that mint 2% mgmt fees without delivering any value-add on a leverage-adjusted basis whatsoever- plus performance fees as soon as they get back over their very weak modified HWM provisions.
If you do that at Rutgers you will be the one frowning; must be over 65 to be a secretary there…at least in the b-school.
– guy that cruises b-schools looking for secretaries that will fix his frown
FYI: Not adding value is not the same thing as LOSING 25%YTD
remind me again how someone who’s long only can be considered a hedge fund?
Endowments’ fees are tipically lower than 0.3% per year. Find me investors that have provided David Swensen’s long-term returns with billions in assets under management for such fees. The 25% “lost” were probably made in the two previous years. Assuming he made $2 million on average for twenty years , he has been paid 40 million for creating nearly $15 billion of value for Yale. Sounds to me like a good deal for Yale.
He isn’t long only, and his average pay is very likely lower than what a regular FoF manager (a good description of what he does) would get paid for that much AUM. And his performance has been decent.
The lesson here, private equity, real estate, other illiquid long only, aren’t all they are cracked up to be.
I’ll lose 25% and take half of what they’re paying him.
it’s pretty clear from bess’s post and the comments that many of the people here have not spent a lot of time on the buy-side, at least not anywhere with $1B+ in AUM. i could spend a lot of time explaining this, but I’ll keep it short:
swensen’s pay has two components: 1.) is long-term performance, and 2.) is retention. because of 1.), he still got paid well in ’09 despite a rocky year. for those who want to scoff, keep in mind yale is the #1 performing endowment of any size over the past 20 years, and swensen got paid very little in the good years (i.e. it’s not like his pay was $50M when they were +20% and $5M when they lost 25%). 2.) i’m more speculating here, but i’m guessing his bonus gets “paid out” over several years, a la options vesting. that’s why he’s making more in ’09 despite better performance in past years (because the unvested parts of past years are rolling off now).
as for the $50M for terrible performance comment, it’s laughable. the number of places that do this is astonishing, in both the PE/HF side and the long-only side.
not sure why these endowment guys are still relevant? they make money during bubble excuse me boom years and they’re looked at like saviors. if you can make the ponzi scheme grow while the larger ponzi scheme is contracting, then you my friend are a true magician.
not sure why these endowment guys are still relevant? they make money during bubble excuse me boom years and they’re looked at like saviors. if you can make the ponzi scheme grow while the larger ponzi scheme is contracting, then you my friend are a true magician.
I hope you’re not in charge of other people’s money. Long Term Performance?! You must be in sales. If it takes 1 year to wipe out 10 years worth of gains, then ‘long term performance’ don’t mean shit. This buffoon chased beta in illiquid investments, whose entire performance was wiped without him hedging or having the means to trade out to limit those losses. Those justifying his continued employment and paycheck are doing so in order to hide their own incompetence for hiring this dumb ass in the first place.
You have an interesting definition of “wipe out 10 years worth of gains”. Including the 25% decline, Yale returned at least 10% per year for the last 10 years. All of the major endowments made money in the last 5 years despite charging laughably low fees.
“I hope you’re not in charge of other people’s money. Long Term Performance?! You must be in sales. If it takes 1 year to wipe out 10 years worth of gains, then ‘long term performance’ don’t mean shit.”
You clearly suck at math. I hope you aren’t responsible for anything.