Harvard’s top endowment managers took home slimmer but nonetheless mammoth paychecks last fiscal year, with two managers pulling in salaries in excess of $25 million, the Harvard Management Company said yesterday.

David R. Mittelman and Maurice Samuels, whose extraordinary salaries sparked a mild outcry among some students and alumni last year, once again led the management company’s payroll, earning $25.4 million and $25.3 million, respectively, in the fiscal year which ended June 30, 2004.

Those salaries were well below Mittelman and Samuels’ compensation in fiscal year 2003, when the two bond managers pulled in $34.1 million and $35.1 million, respectively.

Total compensation among the University’s top six endowment managers declined from $107.5 million to $78.4 million. But since performance was more consistent across the endowment’s many portfolios, salaries in the lower tiers of the payroll—which Harvard is not required to report—likely saw large increases.

The management company’s performance-based compensation system, which rewards managers with handsome bonuses for returns above and beyond their benchmarks, has drawn increased scrutiny since superior endowment results in the past two years began producing record-high salaries for the University’s endowment managers.

Harvard’s endowment soared to $22.6 billion last fiscal year, posting a return of 21.1 percent, a mark unsurpassed in the Ivy League.

But in letters to University President Lawrence H. Summers and sporadic protests last year, critics of the management company’s compensation policy have repeatedly said superior endowment performance hardly justifies the salaries paid out to managers.

“Harvard should use its endowment for the benefit of students, not for the benefit of the people who manage the endowment,” wrote 11 members of the Class of 1969 in a letter to Summers last week.

The University has steadfastly defended its compensation policy since alumni first began to voice their objections. In a rare open letter to the Harvard community last June, then-Treasurer D. Ronald Daniel, citing an internal study, said Harvard would have spent more than twice as much on external hedge funds to achieve the same returns as the University’s internal management company.

And in a letter addressed specifically to the Class of 1969 this summer, Donella M. Rapier, vice president for alumni affairs and development, said Harvard had no choice but to pay competitive salaries to its managers.

“While some of us might wish it were otherwise, the reality is that there are a small number of professions in which the demand for top talent far outstrips the supply,” Rapier wrote. “Intense competition for the very best people in those fields has driven their compensation levels to breathtaking heights: network news anchors, Fortune 500 CEOs, professional athletes, and entertainers with box-office appeal. Managers who can successfully invest billion-dollar funds are in that same league.”

Among reported salaries in higher education, the top earners at the Harvard Management Company have no comparison. In American professional sports, only Kevin Garnett and Shaquille O’Neal earned more last season than Mittelman and Samuels earned last fiscal year, according to the USA Today annual survey of athlete salaries.

But endowments at most of Harvard’s peer universities, including Yale, are invested externally by managers whose fees are not publicly reported.

Even Harvard is not required by the Internal Revenue Service to report the salaries of the management president and five highest-paid employees until next May, when the management company files its tax return for fiscal year 2004. But in an interview yesterday, Jack R. Meyer, the management company president who earned $7.2 million last fiscal year, said the University prefers to announce compensation soon after endowment results are released to avoid “a major disconnect between the numbers and the performance.”

Harvard has waged a year-long public relations campaign to defend its endowment managers’ salaries with letters, like those from Daniel and Rapier, and strong statements by Meyer, who first instituted the performance-based compensation policy when he took over as president of the management company in 1991.

And in what appeared to be a small concession to critics of the burgeoning salaries, the management company board voted in March to lower the maximum compensation for its endowment managers. At the time, Summers said the change “would lead to a significant reduction in top compensation levels.”

Meyer would not say yesterday what the maximum compensation is or whether any managers had encountered the cap in last fiscal year’s salaries.

Meyer has repeatedly acknowledged that intense scrutiny of manager salaries could force Harvard to move to external management of its endowment.

“Maybe it’s not possible to maintain these world-class portfolio managers in an academic setting,” Meyer said.

Jeffrey B. Larson earned $8.1 million in his final fiscal year managing foreign equities at Harvard. He left the management company on June 30 to form his own hedge fund, Sowood Capital, backed in part by University money.

Shawn Martin, who invests domestic and foreign bonds, earned $6.6 million last fiscal year, while Craig Szeman, who invests domestic equities, pulled in $5.8 million to replace Elizabeth A. Randall among the six highest compensated managers.

—Staff writer Zachary M. Seward can be reached at seward@fas.harvard.edu.