[Goose]

The endowment payout is smoothed out to account for ups and downs in the market.  Like, if the market were to ever go down (it happens, you know), it's not like there would be no payout.  Typically, the payout is about 5% of the value of the endowment, so to support a $6 million base salary, the endowment principle would have to be $120 million. (narrator: the actual endowment is not $120 million).  The endowment doesn't pay all of Shaw's salary, and it certainly isn't paying $6 million a year.

BC

BC, I think the 5% number is a bit out of date. When endowments were managed very conservatively that was a good number. The ROI they aimed at was in that range. Heck, even CalPers uses a bigger number than that (which they don't actually meet, but that is another problem). These days the target is higher and in "good" years a much larger return can happen. I suspect you are correct that the endowed chair doesn't pay out 6 mil a year guaranteed money, but I wouldn't be surprised if it paid half that. I don't know what Shaw's contract actually says. It may be the AD pays a fixed payment and the endowed chair pays a percentage of it's ROI over the last N years. In any case, I can't get too worked up about the salary given that I don't know what is guaranteed money, what is endowed, terms of the bonuses etc.

[Goose]

The endowment payout is smoothed out to account for ups and downs in the market.  Like, if the market were to ever go down (it happens, you know), it's not like there would be no payout.  Typically, the payout is about 5% of the value of the endowment, so to support a $6 million base salary, the endowment principle would have to be $120 million. (narrator: the actual endowment is not $120 million).  The endowment doesn't pay all of Shaw's salary, and it certainly isn't paying $6 million a year.

BC

BC, I think the 5% number is a bit out of date. When endowments were managed very conservatively that was a good number. The ROI they aimed at was in that range. Heck, even CalPers uses a bigger number than that (which they don't actually meet, but that is another problem). These days the target is higher and in "good" years a much larger return can happen. I suspect you are correct that the endowed chair doesn't pay out 6 mil a year guaranteed money, but I wouldn't be surprised if it paid half that. I don't know what Shaw's contract actually says. It may be the AD pays a fixed payment and the endowed chair pays a percentage of it's ROI over the last N years. In any case, I can't get too worked up about the salary given that I don't know what is guaranteed money, what is endowed, terms of the bonuses etc.