By Svea Herbst-Bayliss
BOSTON (Reuters) - Harvard University, the world's richest, paid its six top money managers $22.4 million to invest its endowment in fiscal 2008, marking a modest increase from the previous year.
The men will take home the money for having helped grow the endowment 8.6 percent to a record $36.9 billion in the fiscal year that ended June 30, Harvard said on Friday. The annual payouts are based in part on the returns managers deliver.
In fiscal 2007, Harvard paid its top managers $23.3 million.
For years, the school has relied on alternative investments like hedge funds, private equity, real estate and timber in addition to stocks and bonds to help it deliver top returns that are often envied in the investment world.
This year the news of the payout comes a few weeks after the school said the financial crisis had hurt investments so severely that the endowment has lost 22 percent in value in July, August, September and October.
The losses may swell to 30 percent before the end of fiscal 2009, Harvard President Drew Faust said, noting the numbers were the worst the Ivy League school has seen in 40 years and would force it to scale back its budget.
For years, Harvard's multimillion dollar payouts have been a source of friction for the university, as a group of vocal alumni says they are too high. Harvard counters that it would pay much more if it relied exclusively on outside managers, where some hedge fund managers earned over $1 billion in 2007.
Unlike most other large universities, including its rival Yale University, Harvard manages much of its endowment money internally, employing outside managers to invest only about 50 percent of the endowment.
This year, Stephen Blyth, who oversees international fixed income investments, earned $6.4 million, the group's biggest payout in fiscal 2008.
Marc Seidner earned $6.3 million for handling domestic fixed income investments, three times what he earned the previous year.
Former Harvard Management Co President and CEO Mohamed El-Erian, who was largely credited for the school's recent strong returns, was paid $921,000, the group's smallest check.
El-Erian left Harvard Management, the group that manages the university's endowment, a year ago to return to PIMCO after less than two years on the job in Boston.
Andy Wiltshire, who oversees Harvard's timber investments and who ranked as last year's second-highest earner, saw his payout shrink to $3.9 million from $6.0 million in fiscal 2007.
Stanley Zuzic, who oversees domestic equities, earned $4.9 million, while Steven Alperin, who heads emerging equities, earned $4.4 million.
While the payouts are high, they are nowhere near the amounts paid a few years ago. In fiscal 2005, for example, the top earner took home $18 million and as a group the top investment professionals earned a total of $56.8 million.
(Reporting by Svea Herbst-Bayliss, editing by Gerald E. McCormick)