As pointed out in today’s correction in the Daily Sun, Cornell’s ex-Chief Investment Officer received a $420,000 bonus in the 2008 tax year, meaning the ‘incentive compensation’ was presumably awarded to reflect the 19.9% endowment increase under James Walsh in 2007.
Walsh’s total income – including deferred payments – of $871,680 was indeed as the Stun originally put it, “far from the highest among university financial managers.” In fact, among the other Ivy League schools, Walsh’s salary ranked second-to-lowest, higher than only Dartmouth’s. Cornell does not have as massive of an endowment as schools like Harvard or Yale, so it is expected that those schools’ head investment officers would have numerically higher salaries.
However, even if one takes into account each school’s total endowment, Walsh’s income still lies at the bottom of the pool. According to a Forbes article which lists Ivy League endowment changes from fiscal year 2009 (highlighting the drop in funds from 2008-2009), Cornell’s endowment fell 26.4% – as originally stated in the Sun article – from $5.4 bil to $4 bil. A simple calculation will show that Walsh’s salary from the year before – 2008 – is .016% of that total original sum of $5.4 bil. This percentage is higher than only Harvard, whose gargantuan endowment of $36.7 bil renders it quite unreasonable to match such a percentage. Harvard’s top CIO earned .0076% of the endowment, Columbia’s .046%, and Brown’s received .033% of the endowment.
In general, it shouldn’t come as a surprise to anyone that these ‘administrators’ are making such huge chunks of change. After all, these are finance and banker pros that are drawn away from Wall Street to manage massive funds – if it weren’t for the golden lure of big bonuses and pay rates, these guys would be managing hedge funds, like Walsh is now. And seeing as how he was practically the lowest paid of his peers, perhaps his career choices are quite in order.
Clarification: This editorial relied on incorrect information in the Aug. 31 news story originally titled “As Endowment Plummeted, Chief Investment Officer Received $400K Bonus.” The story erroneously reported that Chief Investment Officer James Walsh received $420,000 in “bonus and incentive compensation” in fiscal year 2009 (July 1, 2008 through June 30, 2009), the same period during which the University’s endowment lost about 26 percent of its value. In fact, this incentive bonus was paid to Walsh during calendar year 2008 and reported on the University’s 990 tax form as such. Although the University’s endowment lost about 27 percent of its value in the last six months of calendar year 2008, Walsh’s incentive payment in calendar year 2008 was based exclusively on his performance during calendar year 2007, according to Anne Snell, director of compensation services.
This editorial relied on incorrect information to reach conclusions about the propriety of Walsh’s compensation, and regrets the error.
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Reader Discussion (1 comment)
Randy Wayne (not verified) says:
I hope Reimagining Cornell is not considering giving faculty annual bonuses that would double our income–whether we succeed in our mission or not. I would much rather see any potential discretionary spending targeted to teaching programs and in keeping the cost of tuition from rising so quickly. Call me old-fashioned.