From 2008 to 2012, Harvard’s endowment earned on average a paltry 1.24% return per year. During the same time period the S&P 500 experienced a 4.54% average return on investment per year.

Yet, 10 of the 25 highest-paid endowment fund managers work for Harvard Management Co.

Michael McDonald and Lauren Streib of Bloomberg report:

Harvard Leads in Endowment Manager Pay as Returns Trail Peers

Harvard University isn’t letting underperformance get in the way of top pay.

Ten of the 25 highest-paid U.S. endowment executives at the richest private universities worked for Harvard Management Co. in 2012, the most recent year available, according to data compiled by Bloomberg. Harvard also paid senior managers at its $32.7 billion fund more than what leaders of peer endowments made, even as its investment results trailed the others.

“The cost of managing money through HMC is a fraction of the expense of equivalent external management,” Christine Heenan, a Harvard spokeswoman, said in an e-mail. “This has saved Harvard over $1 billion in management fees over the past decade.”

Harvard and many of the wealthiest schools have struggled to produce superior returns since the credit crisis as global stock markets outperformed private investments in buyout and hedge funds. While the universities count on endowments to subsidize as much as half of their operating budgets by helping cover the cost of financial aid, faculty and programming, the senior staff must be compensated at levels competitive with other institutional investors.

A review of the most recent tax filings of more than 20 of the richest private colleges shows how Harvard stands apart when it comes to asset management. It gave the head of its endowment less compensation than senior staff overseeing non-traditional investments such as hedge funds and natural resources. At every other institution, the chief investment officer or an equivalent position drew the most pay.