Former Chief Investment Officer James Walsh received $420,000 in “bonus and incentive compensation” in 2008, according to tax documents the University filed earlier this year.
In 2008, Walsh received a compensation package that totaled $888,643. This included $413,680 in base salary pay, $15,000 in other reportable compensation, $49,963 in benefits and deferred compensation, and $420,000 categorized as “bonus and incentive compensation.”
Walsh received this bonus compensation during one of the worst calendar years in the University endowment’s recent history, but the bonus was based exclusively on his performance in calendar year 2007, according to Anne Snell, director of compensation services. Under Walsh’s management, the University’s endowment lost about $1.4 billion of its value during fiscal year 2009, falling from about $5.4 billion in June 2008 to about $4 billion in June 2009.
The sudden drop in the value of the endowment forced Cornell to implement hiring and construction pauses, lay off employees and slash budgets across campus. It also prompted the University to launch a massive restructuring process, dubbed “Reimagining Cornell.”
Asked why the chief investment officer’s total compensation during 2008 was more than doubled by bonus payments, Deputy University Spokesperson Simeon Moss ’73 said in an e-mail that “such bonuses are contingent on performance.”
The University takes a comparative approach in measuring performance, Moss said.
“The consideration of such bonuses involves the use of industry benchmarks (including, in this case, the performance of different investment asset classes) as guidelines,” he said.
According to the definition of “bonus payments” that the University provided to the IRS, bonus payments are awarded to individuals “in recognition of accomplishments of specific goals or overall performance.”
The median salary for a chief investment officer at a doctorate-granting institution, like Cornell, is $200,000, according to the 2009-2010 administrative compensation survey from the College and University Professional Association for Human Resources.
The CUPA-HR survey, which sought data from 1,280 colleges and universities nationwide, also found that only 15 respondent institutions awarded bonus or incentive pay to their chief investment officer. At the schools that offered bonuses, the median bonus payment for CIOs was $130,737 and the average bonus payment was $213,957.
Moss declined to provide figures for the compensation of the chief investment officer in previous years, citing the University’s policy regarding disclosure of personnel information.
Walsh, who began his stint as chief investment officer at Cornell in 2006, announced in February that he would be resigning his post in order to return home to the United Kingdom with his family. His employment at Cornell officially ended on June 30. In May, Bloomberg News reported that Walsh was starting a $150 million hedge fund named Cayuga Capital Partners.
The figures for Walsh’s compensation were disclosed on Cornell’s most recent Form 990, which is a federal tax document. The IRS requires Cornell, because it is a non-profit organization, to annually report the compensation of its officers, directors, trustees and other “key employees.”
Although the chief investment officer has historically not been considered a “key employee” for this purpose, Cornell was forced to disclose the CIO’s salary this year under new IRS rules that expanded the definition of “key employee.”
The University’s most recent Form 990, which was filed in May of this year, also includes compensation information for Cornell’s president.
For calendar year 2008, President David Skorton’s compensation package included $653,545 in pay (an increase from $636,578 the previous year) and $262,368 in benefits and deferred compensation (an increase from $199,804). Skorton announced in January 2009 that he would voluntarily cut his salary by 10-percent in fiscal year 2010 because staff and faculty were not receiving pay raises and students were paying higher tuition.
The University is also obligated to report the names and salaries of its top five highest-paid employees. In 2008, four professors of reproductive medicine at Weill Medical College — Pak Chung, Isaac Kligman, Zev Rosenwaks and Steven Spandorfer — and the chair of the urology department, Prof. Peter Schlengel, made the list, with total compensation packages that each ranged from $1.9 to $3.4 million.
Correction: The original version of this story erroneously reported that Cornell 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. The headline and story have been changed accordingly.
The story also reported compensation figures for President David Skorton and the highest-paid Cornell employees (all professors at Weill Cornell Medical College). Those figures refer to compensation that was paid out during calendar year 2008, not fiscal year 2009 as the story incorrectly stated.
The Sun regrets these errors.