Take Harvard's Money...And Run
The Times weighs in with a piece on Harvard's difficulty replacing Jack Meyer, the brilliant money manager who's overseen the truly remarkable rise in the university's portfolio—I'm guessing it's hit the $25 billion mark by now. The Times reports that, in the decade ending in 2004, Harvard had an average annual return of 15.9%. Wow.
No one wants the job, the Times suggests, because a) it's high-profile, and money managers don't like to be in the spotlight (
RB: that's far from universal, IMHO), and b) while they can make, say, $30 million a year at Harvard, if they ran a hedge fund, they might make something more like $250 million annually.
Lots of thoughts about this.
First, and most important, the Times completely ignores another, oft-whispered reason for Meyer's departure and the reluctance of anyone else to take the job: the role that Summers may have played in Meyer's decision to resign.
I've heard from multiple sources in the Harvard world and the financial community that Meyers had grown frustrated with Summers' desire to have direct involvement in the Harvard Management Company, the investment firm Meyers ran to manage Harvard's money—even to the point of suggesting specific investment strategies and choices. That, more than the controversy over his staff salaries, may be the reason Meyers quit.
It may also be the reason no one else wants the job.
The Times inadvertently nibbles around the edges of this by reporting that the original search team for a Meyers replacement consisted of Summers, brother-in-arms Robert Rubin, and University treasurer James Rothenburg. (Both Rubin and Rothenburg are Summers' appointees to the Corporation.) That trio failed to find anyone, but its existence alone suggests that Summers must have wanted someone he could keep close, someone he could control. The fact that it failed might also suggest that those interviewed by the threesome were wary of Summers' role.
(The search is now being undertaken by a search committee. One wonders at what point Summers, Rubin and Rothenberg realized that their failure to hire someone was going to make them look silly.)
Because, truth be told, the salary differential between Harvard and hedge funds can't alone explain the fact that Harvard hasn't found anyone in the eight months it's been looking. Surely there must be a money manager somewhere who thinks that $25 million a year is enough; surely there must be a Harvard alum somewhere who believes that taking a money hit from the offensive to the insane is worth it, to serve the old alma mater. Perhaps it's not the money that matters, but the boss.
I know that some reporters have tried to get at the real story of Meyer's exit, but as long as Meyer won't talk, it's a tough nut to crack. Still, it's a huge and important story. Harvard can survive tension between the president and his faculty. But it will not stand for a president who may have driven out a money manager with an unprecedented track record. Because in the end, the key to Harvard's success, its titanic image, its aura of fortress-like impregnability, is money.
One wonders, too, how those alumni donations are going...wasn't that capital campaign supposed to start by now? Or has it been postponed again?
It would be interesting for someone at some point to create a chart of the problems that Summers was supposed to have solved...versus those he has created.
