Harvard Management to cut 50 jobs after endowment fund tumbles US$8B in four months
February 6, 2009
– Harvard University said Friday it will cut about a quarter of staff -- or about 50 jobs -- from the company that manages its endowment after the fund's value tumbled $8 billion in four months.
The estimated 22 percent decline, by far the largest in higher education, was the sharpest drop in the endowment's history. The fund was valued June 30 at $36.9 billion before falling to $28.7 billion by October.
The university is projecting the endowment will decline by a total of 30 percent by the end of its fiscal year in June.
In a statement, Harvard spokesman John Longbrake said executives at Harvard Management Co., which is headed by Jane Mendillo, decided to make the cuts after analyzing the company's structures and processes. The company needed the changes to "maintain its position as a world-class investment organization," Longbrake said.
The layoffs, which will come over the next several months, will include investment professionals, as well as employees in operations and human resources and its technical and legal departments, Longbrake said.
The cuts follow a December letter to deans from university heads that said Harvard must take a "hard look" at staffing levels and compensation. The school also has said it recently absorbed major hits to its U.S. stock portfolio and foreign equity portfolio.
The pay of top executives at Harvard Management has been controversial over the years; in 2003 two money managers earned more than $34 million each. But before the current economic decline, the fund consistently far outperformed the market.
Recently, compensation at the company has fallen because outside firms are managing more of Harvard's money. In the last fiscal year, the five highest paid executives at Harvard Management Company earned between $3.9 million and $6.4 million each.
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