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Sunday, October 17, 2004
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WAG THE DOG
Gotta give Jack Meyer credit for honesty. He oversees money-management for Harvard, and routinely pays each of his best managers upwards of thirty-five million dollars a year. This rate of compensation at a non-profit institution so disgusts a group of prominent Harvard alumni that they're withholding contributions to the university until it does something about it. [On 6/4/04, UD blogged about the front-page coverage of this story in the New York Times.] Meyer, interviewed by a Boston newspaper, says what always gets said: If you want the best people, you've got to pay them. If you want to keep them on your team, you have to meet their price. No upper limit. No principle involved. You just have to keep comparing what you're paying them to what they could be paid elsewhere. And this is the alumni group's response: It's obscene for one person to take home forty million dollars a year in salary, and it's particularly obscene in a non-profit university setting. Human beings who insist on pocketing that kind of money shouldn't be associated with universities. Harvard's president is beginning to get the picture: "According to university sources, the big bonuses and the bad publicity they generate are a distraction for the school. No decision has been made, but those same sources say it is possible Harvard will choose to scale back the paychecks or hire outside managers." And here's where Meyer's honesty comes in: "Meyer is well aware the issue is a sensitive one, and that in the end it may not be possible to retain what he calls "world-class" money managers in a university setting. 'The tail can't wag the dog,' he said. 'We are the tail. Harvard is the dog.' After 14 years, Meyer shows no sign of losing interest in the job. 'This is the best job in the investment business,' he said. But then he added, 'It would be nice if we didn't have the compensation problem.'" Yes indeed, for a variety of excellent reasons, it may not be possible to retain world-class money managers in a university setting, if by world-class we mean the sort of people Meyer now compensates so excessively. It may be that world-class money managers live in a world at such profound odds with the world of the university that they should leave it. |