The optimist thinks this is the best of all possible worlds. The pessimist fears it is true. – J. Robert Oppenheimer

In the late 80’s Don Valentine, founder of Sequoia Capital, asked me to stop by his office for a chat. I was recruiting for venture capital firms at the time while writing on the side for the San Jose Mercury News and had quoted him in previous pieces.

Once we settled in he announced with gruff solemnity that there was too much money chasing too few good startup opportunities. And that was not likely to change.

Keep in mind, this was only a few years after Sequoia had bankrolled Atari, Apple, and Cisco Systems. But for some reason he voiced deep concern. (Rising valuations and increased competition might have also sullied his mood.)

Whatever his reasons, we all know what happened in the decades that followed: invention and innovation, blockbusters and unicorns, thousands of jobs, billions in wealth. Silicon Valley’s cauldron of creation.

And yet, despite America’s world-beating record of entrepreneurial alchemy “It’s like déjà vu all over again,” to quote the inimitable Yogi Berra. You would half think the media pundits were praying for a recession, better yet, end-of-days.

Fortunately, the American consumer seems to have other plans. Hiring is brisk, investment performance strong, inflation down, startups pitching, and rates plausibly dropping.

“Since the Great Depression of the early 1930s there have been 14 US recessions.” Yet, despite the challenges, with each rebound life just gets better.

We’re betting on a sunrise tomorrow.

All the best for the holidays. And here’s to a fine 2024.

 — Charles Skorina

Price is what you pay. Value is what you get. — Warren Buffett

What do chief investment officers earn at nonprofit institutions? We recruit these executives for a living, so we avidly track their pay and performance. In this letter, we highlight the compensation of fifty chief investment officers and investment heads at private US foundations.

Many nonprofits, family offices, and Wall Street firms employ top investment professionals, but it’s difficult to extract meaningful data on compensation from reluctant sources. Ergo, we go with what we can get.

In this comp report we’re going with a revealing data set from our good friend John Seitz, CEO of FoundationMark. We wrote about Mr. Seitz in last month’s newsletter on “Foundation Investment Performance,” and we think his research and rankings are useful companions to our endowment studies, of interest to asset owners and all purveyors of investment products and services.

The Bigger the Better

Nonprofit investors wear many hats but have essentially one metric by which they are judged, long-term performance. However, that does not seem to be the metric for how they are paid. When it comes to compensation, size matters.

A few years ago, we ran some correlations using our archival datasets to see how pay correlated to AUM, tenure, and performance at endowments.

The coefficient for AUM to comp was 0.69, which is moderately high. But tenure and performance did not appear to have much impact on CIO pay. In most cases, size trumps all other metrics.

Our correlations

Comp-vs- AUM:  0.69

Comp-vs-Tenure: 0.31

Comp-vs-5yr Returns: 0.27

Kevin Hallock, President, University of Richmond, an expert in the field of executive compensation, and author of “Pay: Why People Earn What They Earn and What You Can Do Now to Make More,” puts it this way: