April 17, 2007

Two Notes on Old New York Times

by PG

WHY THEY BOLTED: In a laudatory piece about Yale's money manager, who's currently compensated with $1.3 million annually, NYT writer Geraldine Fabrikant notes, "A number of high-profile endowment chiefs have recently bolted academia for the more lush pay packages offered by private funds in the for-profit sector. When Jack R. Meyer, who racked up stellar returns as the head of the Harvard endowment, gave up his post in 2005, for example, he and his team easily raised $6 billion for their new hedge fund. But Mr. Swensen says he has no desire to do something similar." But Harvard's pay package originally wasn't so modest, as Prof. Gordon remarked in an analysis of performance-based executive compensation and what makes us uncomfortable with high salaries:

An illustrative example is the controversy over Harvard University’s compensation of the managers of its $20 billion-plus endowment and the university’s palpable embarrassment in responding to the outrage of some alumni. Two particular managers each received approximately $35 million for 2003, which we know because they are the most highly paid employees of Harvard, as revealed in its tax filings. In all, the top five investment managers received approximately $100 million.
After the outcry, Harvard reduced its compensation, and the investment management team left.

ANOTHER ANTITRUST ELEMENT: This article about the BAR/BRI suit and settlement neglects two facts well-known among law students. First, there's always the Pieper alternative! More importantly, BAR/BRI's market dominance has a peculiar network effect due to how the bar exam is scored. As De Novo guest-blogger Cathy Gellis pointed out,

Apparently if too many people get a question wrong, [the exam graders] won't count the question and so everyone will end up with credit for that question in their scaled score. Theoretically, then, BarBri can game the system. In fact, it probably does game the system - even if not purposefully. Since so many people take the review course, if it doesn't cover a certain topic then lots of people may resultingly get that question wrong, perhaps in great enough numbers to void the question. So in a sense, BarBri by its very existence may well determine what you'll need to know for the bar.

April 17, 2007 11:12 PM | TrackBack
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