The typical endowment chief investment officer’s (CIO) pay has been growing at a compound rate of more than seven percent per year, according executive search firm Charles A. Skorina & Company. In a report published by the firm last week that updates its previous report on CIO compensation published last month (IA, 11/8), the firm says the previous report used the latest available compensation numbers for 74 chief investment officers at the biggest (more than-$1 billion AUM) endowments, but that those numbers (for calendar year 2015) were already quite stale. By contrast, for the latest report, the firm used its own estimates of what these CIOs are making currently, extrapolating from 2015 to 2018.
“We looked at a large subset of those original 74 CIOs—32 who had held office for five consecutive years, 2011 to 2015. It’s a big enough and inclusive enough subset (big and small, public and private, geographically diverse) that we feel comfortable projecting our findings to the whole population of 74 CIOs,” Charles Skorina, the firm’s principal, wrote in the report. “From that time-series we projected out three more years to get point estimates for 2018.” He emphasized that the compensation computation is for total W2 compensation, including base, bonus and “other” as classified by the IRS, and omits other benefits which are not taxable to the CIO, but which may be significant.
According to the report, the median big-endowment CIO made approximately $609,000 in 2011. Five years later, in 2015, he or she was making about $1,100,000, representing a rise of approximately 80% over five years. Stated as a compound annual growth rate (CAGR), that’s 12.6 percent per year, the report said.
“But that’s based on historical data,” Skorina explained. “We then needed to push our trend lines out from 2015 to 2018, for which we have no data. We found that CIO pay is still growing briskly, but that the growth rate seems to be slowing in recent years,” he said, explaining that from 2015 to 2018, the firm estimated that the median CIO in its sample grew his/her pay from $1,100,000 to $1,380,000, for a rise of 26% over three years. “As a CAGR, that’s 7.1% per year,” he said.
The Big picture
Skorina said the main takeaway from the report’s findings is its estimate of average pay growth for the whole sector. “We left those departed CIOs in our list because they still contributed to the overall average (or median) total for each year, even if they don’t need a personal 2018 estimate,” he said. “We didn’t calculate individual numbers for all the CIOs in our October report. But our sample is big enough to be representative, and any reader can apply that 7.1 CAGR to the 2015 pay of any big-endowment CIO and get a reasonable guesstimate of what he or she has been making in subsequent years up to today.”