Though the University’s endowment dipped, Harvard’s top five money managers earned $15 million more last year than the year before, according to figures released yesterday by the Harvard Management Company (HMC).

The top five were paid nearly $70 million last year, a total that has risen every year for the past three years. The top individual salary this year came in at $17.5 million.

Salaries reflect the performance of money managers over several years compared to the market averages, or benchmarks, that HMC uses to judge the endowment’s performance. Over the last decade, Harvard’s endowment has surpassed its peers and outperformed its benchmarks.

Last year, for example, HMC’s benchmarks dropped by 4.5 percent. But the endowment slipped just half a percentage point, falling from $18.3 billion in Fiscal Year 2001 to $17.5 billion.

Consistently outperforming other investments and financial indexes, as HMC’s portfolio has done the last three years, explains why top managers earn such large salaries even in hard economic times, HMC President Jack Meyer said.

“If you continue to have good performance, it eventually pays out,” he said. “That’s what we’re seeing this year.”

Over the last five years, last year’s top earners generated a combined $1.7 billion beyond their benchmarks.

Fixed-income specialist David Mittleman received the highest compensation—$17.5 million—last year, one year after he was HMC’s second-highest earner.

The top earner in Fiscal Year 2001, Jeffrey Larson, who specializes in foreign equity, dropped to number two this year, earning $17.4 million.

The three other top earners—Maurice Samuels, Steve Alperin and Tony Morgan—earned $15.9, $12.1 and $6.3 million respectively. None of the three was on the top-five list during Fiscal Year 2001.

HMC employees’ compensation includes a base salary, a lump sum for meeting their benchmarks and a performance bonus for exceeding them over a five-year period.

Meyer, who made $5.7 million last year, said almost all of the managers’ compensation comes in the form of bonuses.

But Matthew R. Skomarovsky ’03, a member of the student-alumni watchdog group HarvardWatch, described the compensation as an injustice.

“This demonstrates the monstrous pay inequities that exist at Harvard, which are more fitting of a multinational corporation than an educational nonprofit [institution],” Skomarovsky said.

But HMC has defended the practice of paying its investors salaries comparable to what they would earn in the private sector, and industry experts agree.

“If you’re going to invest internally, you want to make sure you have the best investors you can get. You’re competing in their business not yours,” Eve Guernsey, J.P. MorganChase’s managing director of institutional investing, said last year.

Because of its size, Harvard can afford to pay its money managers competitive industry salaries, a critical element to maintaining the best managers, according to Meyer.

University President Lawrence H. Summers also justified the money managers’ high compensation.

“The pay reflected in performance relative to indices,” Summers said. “In fact, the University is able, by using in-house managers, to achieve superior returns at a far lower cost than it could if it paid a financial management company which then paid external managers.”

Because HMC is a nonprofit subsidiary of Harvard, it must report the compensations of its five highest-earning employees, while nonprofit institutions that use outside investment managers are not required to report this information.

HMC is not required to release the compensation figures until next year, but traditionally publishes the numbers soon after releasing its performance figures in the fall.

“This is difficult from a p.r. standpoint because these are some large numbers,” Meyer said. “Our numbers tend to stand out, even though we know that the total cost to Harvard is less than it would have been if we used external managers.”

—Staff writer Jenifer L. Steinhardt can be reached at steinhar@fas.harvard.edu.