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.
Comp-vs- AUM: 0.69
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:
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Mellon’s John Hull Tops Non-Profit CIO Pay Rankings
Institutional Investor – March 15, 2012 • Frances Denmark
Charles Skorina had a problem. As an executive search consultant specializing in filling investment officer holes at pension funds and endowments, he was often asked by boards of trustees to produce metrics to aid in candidate comparisons. But in his 30 years in the search business, such data had proved hard to come by — that is, until late January. That’s when Skorina’s “CIO Performance-for-Pay” ranking (see chart below) hit the institutional investor zeitgeist.Read More »
Bloomberg: Help Wanted on Campus – Top U.S. universities are looking for a new breed of investment manager who can be nimble in tough times.by charles | Comments are closed
Bloomberg: Help Wanted on Campus
By Gillian Wee – Aug 18, 2010
Bloomberg Markets Magazine
Top U.S. universities are looking for a new breed of investment manager who can be nimble in tough times.Read More »