Meyer Takes the Helm:

Cabot’s replacement, Jack R. Meyer, came to Harvard from the Rockefeller Foundation, where he served as the CIO for an endowment that outperformed Harvard’s own—his former boss called him the “Ty Cobb of fund managers.”

Meyer told newspapers that his new position at HMC was the “perfect job.”

He pursued an even more aggressive investing strategy than Cabot’s, even though Harvard was held more accountable for its investments.

He revamped HMC’s compensation structure so that it rewarded longer-term performance and tied its structure to benchmarks selected by HMC’s board of directors that “outperform[ed] the average manager,” according to Meyer.

“That’s the whole point of active fund management. If we just wanted to match the market, we could do that with an index fund,” Meyer says.

But Meyer’s new tack left ruffled feathers among Cabot’s former staff, and five high-level investors left the firm in the first year of Meyer’s term.

Aiming Higher

Meyer’s changes paid off during his first three years as HMC president, and in 1993, the endowment returned 16.7 percent.

In 1997 HMC reported that the endowment had grown to $10.8 billion, returning 26 percent in a year when the industry average was 17.6 percent for other large institutional funds.