Here’s a stripped-down version of our larger database which charts the compensation of the fifty highest-earning chief investment officers.  We don’t recall seeing such a thing elsewhere and we thought it might be of interest to our readers.

Our internal document contains many more names, numbers, and details, but we’re not going to give away all the good stuff.

Top 50 CIO Salaries, FY 2009

	CIO	Nonprofit	AUM $bn	Total Comp	W2 Comp	Non-W2 Comp
1	Mendillo, Jane	Harvard U (HMC)	27.6	$4,754,379	$3,498,265	$1,256,114
2	Swensen, David F.	Yale U	16.7	$3,795,540	$3,715,724	$79,816
3	Narvekar, Nirmal	Columbia U (CIMC)	6.5	$3,447,953	$1,980,746	$1,467,207
4	Malpass, Scott C.	U Notre Dame	5.2	$2,057,827	$1,532,859	$524,968
5	Hoagland, Laurance	Hewlett Fdn	7.4	$2,015,635	$1,919,117	$96,518
6	Schmid, Mark	U Chicago	5.6	$1,790,730	$1,019,070	$771,660
7	Brightman, Chris J.	U Virginia (UVIMCO)	3.9	$1,708,610	$1,475,636	$232,974
8	Strack, Denise	Moore Fdn	5.2	$1,671,347	$1,411,230	$260,117
9	McLean, William H.	Northwestern U	5.9	$1,594,019	$1,529,011	$65,008
10	Golden, Andrew	Princeton U (PRINCO)	14.4	$1,458,504	$1,270,961	$187,543
11	Powers, John	Stanford U (SMC)	13.9	$1,395,189	$1,122,583	$272,606
12	Manske, Susan E.	MacArthur Fdn	6.0	$1,353,124	$1,353,124	NA
13	Triplett, Neal F.	Duke U (DUMAC)	5.7	$1,253,819	$682,076	$571,743
14	Moehling, John H.	Packard Fdn	6.4	$1,196,037	$1,062,359	$133,678
15	Shuman, D. Ellen	Carnegie Fdn	2.5	$1,152,874	$1,059,926	$92,948
16	Zimmerman, Bruce	U Texas (UTIMCO)	14.1	$1,127,186	$1,083,896	$43,290
17	Brenner, Suzanne	Metropolitan Museum	3.0	$1,120,956	$647,372	$473,584
18	Zimmerman, Landis	Hughes Medical Institute	16.8	$1,058,357	$1,022,458	$35,899
19	Boateng, Joseph	Casey Family Programs	1.9	$1,038,916	$838,350	$200,566
20	Wise, Scott	Rice U (RMC)	3.8	$1,038,536	$804,626	$233,910
21	Williams, James	Getty Fdn	3.5	$1,019,191	$962,086	$57,105
22	Frost, Cynthia E.	Brown U	2.2	$1,011,351	$836,028	$175,323
23	Harris, Thomas “Britt”	Texas TRF [Pension]	100.7	$1,001,512	$1,001,512	NA
24	King, Jonathan	U No Carolina (UNCMCo)	2.0	$983,764	$832,136	$151,628
25	Gilbertson, Kristin	U Pennsylvania	5.7	$961,059	$746,099	$214,960
26	Lawler, Paul	Kellogg Fdn	6.7	$925,565	$925,565	NA
27	Alexander, Seth	MIT	9.9	$888,495	$862,245	$26,250
28	Pittman, Scott	Mt. Sinai Medical Center	1.1	$873,511	$852,127	$21,384
29	Kim, Randy	Hilton Fdtn	1.9	$852,881	$793,580	$59,301
30	Smith, Michael J.	Mott Fdn	2.1	$852,153	$606,415	$245,738
31	Cahill, Mary	Emory U	4.7	$851,982	$812,621	$39,361
32	Pulavarti, Srinivas	U Richmond	1.6	$826,768	$684,315	$142,453
33	Crecelius, Kathryn J.	Johns Hopkins U	2.2	$825,947	$745,747	$80,200
34	O’Neil, Brian S.	Johnson Fdn	10.1	$808,800	$720,908	$87,892
35	Wright, Matthew	Vanderbilt U	3.0	$779,405	$687,356	$92,049
36	Manilla, Robert J.	Kresge Fdn	3.1	$774,816	$653,465	$121,351
37	Doppstadt, Eric	Ford Fdn	10.7	$768,126	$622,718	$145,408
38	Heil, Jeffrey	Doris Duke Char Fdn	1.6	$750,000	$750,000	NA
39	Walker, Kimberly G.	Washington U (St. Louis)	4.5	$710,836	$685,138	$25,698
40	Reeg, Gloria D.	NY Presbyterian Hospital	1.6	$683,968	$582,151	$101,817
41	Madding, Bruce W.	Henry J. Kaiser Fdn	0.6	$651,815	$506,517	$145,298
42	Berggren, Marie N.	U California	5.4	$637,823	$637,823	NA
43	Clay, David	Grinnell College	1.3	$628,243	$588,328	$39,915
44	Chilton, Colette D.	Williams College	1.5	$628,120	$518,250	$109,870
45	Hook, Jonathan	Ohio State U (OSU Fdn)	1.9	$627,300	$627,300	NA
46	Hull, John E.	Mellon Fdn	5.1	$620,616	$551,250	$69,366
47	Kuenstner, Deborah	Wellesley College	1.3	$620,116	$588,421	$31,695
48	Cary, Charles W., Jr	Georgia TRS [Pension]	45.9	$609,440	$609,440	NA
49	Danzig, Lisa	Rockefeller U	1.6	$608,209	$565,860	$42,349
50	Dean, Donna J.	Rockefeller Fdn	3.8	$589,577	$564,991	$24,586

 

Knowing Our Limitations

Certain limitations of our data should be noted.

We are looking at the “real money” side of the market.  That is: the CIOs of endowments, foundations, public pension funds, healthcare organizations, and various other tax-exempt, not-for-profit funds.

We think this list is fairly comprehensive within those bounds, but we’ve undoubtedly missed someone.

There are a lot of people wearing the CIO title who work for money managers such as mutual funds, hedge funds, investment banks, insurers and so forth.  They are not included for the very practical reason that their compensation is almost impossible to obtain.

To these unobtainables we must add the managers of major corporate pensions.  They are often designated CIOs and manage tax-exempt money, but they need not divulge their pay.  Family offices don’t run tax-exempt money but they, obviously, are even more discreet than Fortune 500 companies about CIO comp.

Of course, various consultants obtain confidentially-reported comp numbers, then use them to generate and publish (often for a fancy fee) industry means and medians while concealing the particulars.

But, unless you know the location, experience and pedigree of the CIO and the peculiarities of his/her employer, a comp number is often inexplicable.

One Cheer for the IRS

The Internal Revenue Service (and its Congressional masters) has compelled nonprofits to reveal more salary information over the past couple of years by updating the rules for forms 990 and 990PF. Much of our data is from these filings.

These still have limitations.  As of today, the most recent 990 filings available are usually for fiscal year 2010, which typically ended last June.  For 990PF filers, the lag may be even longer.

Per current rules, a filing must report salaries for the most recent calendar year ending within that fiscal year.  In most cases that’s calendar 2009, which is now 21 long months ago.

Most of these people are now paid more than they made in 2009, but not always.  The W2 compensation often includes a substantial performance bonus; so, ups and downs in the markets and whether you’re hitting your benchmarks causes year-to-year swings.

But base salaries tend to rise over time.  In general, we think that 2011 W-2 comps are five to ten percent higher than 2009 comps.

Turnover

In football (American football, that is, not that other sport) a turnover means a fumble or an interception.  In my business it means that somebody got a better offer (and some hard-working recruiter earned a commission).

That 21-month gap means that we are (mostly) reporting comp as of 2009 paid to people on the job in that period.

This is annoying, but also interesting.  In a previous article I came up with a turnover factor for CIOs of about ten percent based partly on empirical data and partly on informed estimates.  What we see in this list of 50 is that ten percent have turned over in about a year and a half.  On an annualized basis, that’s only about 7 percent, but this is a small sample and these are the highest earning CIOs.  In our larger database the number is indeed about 10 percent, as I surmised.

People who have since moved on to a better paying job (or possibly retired) in the last year or so are italicized in the list.

They are:

01 Chris Brightman at University of Virginia, who was succeeded by Lawrence Kochard (from Georgetown University) back in June;

02 Ellen Shuman, who left Carnegie Corporation in July, with no successor yet named;

03 Scott Wise, who left Rice University in July to head up Covariance (CREF-TIAA) in Houston, and is succeeded by Allison Thacker;

04 Bruce Madding, who left the H.J. Kaiser Family Foundation in August 2010, replaced by Koonal Gandhi; and…

05 Lisa Danzig, who left Rockefeller University in April, replaced by Amy Falls, who moved over from Phillips Academy.

In most cases we can assume that the successor makes roughly the same salary as his/her predecessor, but not invariably.

A Rose is a Rose

We have omitted some annotations and data in this list, including specific job titles.  We are using “CIO” in a generic, non-pedantic sense.  Some of these people are officially styled “Managing Director of Investments,” or “Assistant Treasurer,” or various other titles.  We are satisfied that in each case they run the organization’s investment function.

In most cases they have a crew of subordinate portfolio managers reporting to them.  The CIO, in turn, usually reports directly to their organization’s chief executive.

One obvious set of “non-CIO” CIOs consists of the people heading semi-autonomous units which manage college endowments, such as Harvard University’s Harvard Management Company.  These leaders are usually titled President and/or CEO and may or may not also have “CIO” on their letterhead.  Columbia has both a president of its investment company (Mr. Narvekar) and, reporting to him, a chief investment officer.

This is unusual but, given that Columbia’s investment returns now lead the Ivy League for the second year in a row, it seems to work just fine for them.

Keeping it in the Family

Our sharp-eyed readers will notice the absence of the country’s (the world’s?) biggest foundation.  Surely the manager of the Gates Foundation’s investments should be high on the list.  Where is he?

Most of Bill Gates’ family money (housed in Cascade Investment LLC), as well as most of the $37 billion in the Gates Foundation, is managed by low-profile Bill Gates Investments in Seattle, which is headed up by low-profile Michael Larson.  (The word “Gates” doesn’t appear on his business card, and when you call him, his assistant answers the phone by saying “investments.”  Now that’s a low profile.)

I’ve enjoyed meeting Mr. Larson, a fellow University of Chicago MBA and an awesome investor, and, if I knew what he made, I suspect he might be in the number one slot on the chart.

But I don’t, so he isn’t.

Mr. Larson’s salary is just one of several “known unknowns” among foundation CIOs who would rank high on our list, but whose compensation is offloaded to a separate, non-filing entity.”

For instance, the $1.5 billion Broad Foundation in L.A. has a new CIO — Eric Schwartz, replacing Peter Adamson last year — but on the Foundation’s 990PF we can only see a dollar amount ($2.7 million in FY2009) charged over to the Broad family office, which is not a 990 filer.  We don’t know the salary of Mr. Adamson back in 2009, or the family office staffing and overhead, or how costs are apportioned between family assets and the foundation.  So be it.  The best we can do is look at the comp for CIOs of similarly-sized foundations.

Things You Aren’t Supposed to Know

“Private” institutions like non-public colleges and foundations are required by the feds to reveal — eventually — what they pay their key employees.  “Public” institutions, however, like public colleges and state pension funds, usually don’t because they are not subject to IRS rules, and our elected state officials often see no good reason why you should know these things.

For salaries in this subset we had to turn to various other sources and sometimes came up dry.

Journalists and advocacy groups can sometimes file freedom of information requests which compel public officials to reveal this information, or they know just where to look within the legislative sausage-making apparatus to find a number on some obscure document which never came near a press release.  But this varies from state to state depending on local laws and the zeal of the newspapers.  Salary figures, when available, are often out of date and lacking in detail (often limited to “base” salary only, and excluding other compensation.)

In a few cases we have had access to confidential salary data.  In most cases we are just reporting what is publicly available if one is willing to dig.  None of these numbers are guesses or estimates.

Show Us the Money

We aren’t payroll accountants and various sources furnish different levels of detail, but we’ve listed compensation in a way that makes sense to us.

“W2 Comp” includes base salary, performance bonuses and, sometimes, an “other” item.  This is what the CIO actually receives in his/her monthly check, and on which income taxes are owed in the current year.  Bonuses are not broken out separately here, but they are often substantial.  In a few enviable cases, bonuses exceed base salary.

“Non-W2 Comp” includes deferred items which are not paid to the employee in the current period.  This includes some kinds of pension payments and bonuses which will only redound to the employee in some future period.  In addition to deferred items it also includes nontaxable benefits such as medical insurance premiums.  Some CIOs also have significant untaxed expense account reimbursements, also lumped into this number.

“Total Comp” is just the sum of these two and is the number we use to rank the CIOs.

From the point of view of an employer — say, a board member — the total comp is what counts.  It’s the total cost of the CIO to his employer.

From the point of view of a CIO or aspiring CIO, the W2 comp may be more interesting.  It’s what he or she will actually have to spend this year.

When sources offer only a single number, we arbitrarily assume that it’s W2 income and list non-W2 comp as “NA.”

A Tale of Two Cities

So, what is the meta-message in this chart?

What jumps right out is that only two public pension CIOs make the cut.  And these two control more than a third of all the funds represented.

Britt Harris at Texas TRF in Austin and Charles Cary at Georgia TRS in Atlanta invest about $150 billion between them.  All of the Top 50 taken together only manage about $420 billion.

Also, there are only two healthcare CIOs represented: Scott Pittman, who runs the money at Mt. Sinai and Gloria Reeg at Presbyterian Hospital, both in New York City.

All of the remaining 46 are educational endowments, private foundations, or foundation-like public charities like the Metropolitan Museum.

We didn’t have to run the list to discover that public pension CIOs are relatively underpaid, but it does underline that fact.  Mr. Cary is responsible for twenty-nine times more money than Ms. Reeg, but Ms. Reeg made about eleven percent more in 2009.

That the market for CIOs is starkly segmented in this respect we already know.  But it gets worse; or more interesting, depending on where you sit.

Let’s look again at Mr. Harris in Austin, who runs $100 billion for TRS, and compare him to, say, Jon Braeutigam who is CIO of the Michigan SMRS pension fund, managing $48 billion up in Lansing.  Wait, he’s not on the list, you say?  Exactly. Mr. Braeutigam didn’t come close to making the cut. According to the Lansing State Journal he made $109,895 in 2007, the latest we could find.  Let’s generously assume that he got five-percent boosts in 2008, 2009, and 2010 (we hope he did), so that he was making about $133K in 2010 when Mr. Harris, according to the Dallas Morning News, was making $1,001,512 going into 2011.

True, Mr. Harris is responsible for twice the AUM, but he made nine times as much in compensation.  So, there are some pretty dramatic differences in compensation policy even within the public pension space.

Mr. Harris’ take-home consists of a $480 thousand base, plus a $521,512 performance bonus for beating his benchmarks in previous periods.  Even his base is at least three times Mr. Braeutigam’s.  We haven’t nailed this down, but we very strongly suspect that Mr. Braeutigam has no such bonus opportunity.  We’d be glad to hear about it if we’re wrong.

We are not bringing this up to embarrass Mr. Braeutigam or the great state of Michigan.  Not at all.  He seems to be doing a good job.  Both CIOs had been on board for about four years as of the end of FY2010.

For FY2010, Mr. Braeutigam’s fund earned 8.5 percent; the five-year return was 3.3 percent.

Mr. Harris’ TRS returned 15.6 percent for FY2010 ending 31 August, but only 2.9 percent over five years.

So, hmm. Mr. Braeutigam toiling up in Lansing has had measurably better results during his tenure than Mr. Harris when we look at the more meaningful five-year performance: 3.3 percent versus 2.9 percent.

Forty basis points, when you’re talking about tens of billions of dollars, means big bucks, as everyone reading this understands.  That’s a difference of hundreds of millions of dollars in earnings when cash-strapped state governments are struggling to fund their pensions in hard times.

So, when performance is added to the mix, Mr. Braeutigam’s paycheck looks like a better and better deal to his employer.

Lansing and Austin are rather similar.  They’re both mid-sized cities, both state capitals and both home to big state universities: University of Texas and Michigan State University, respectively.  (Okay, Austin is bigger, and technically MSU is in East Lansing, not Lansing; work with me here.)  MSU is a semi-alma mater of mine, and I have family in Lansing.  And Mr. Braeutigam earned both his degrees from MSU.  So I’m pulling for him.

But Britt Harris is a good guy, too, and I’m not suggesting (as some noisy Texans have) that he’s overpaid.  We’re just looking at the numbers.

There’s no simple, obvious explanation of big disparities like this (and I’m citing just one example).  I suspect it has something to do with the different cultures in the two states.  Michigan tends to be union-dominated and officially egalitarian.  Texas is right-to-work and more entrepreneurial.  And, of course, Michigan has been in terrible fiscal trouble for years, while

Texas is doing relatively well.  All this is probably in the mix.

But when you don’t have good theories it’s always useful to look at the actual data, which is why we’ve offered our chart.