Word: marriott
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...recent setback from Marriott's division of its stock is only the latest in a series of blunders that have plagued HMC. The university has a 12% stake in Marriott preferred shares, worth about $35 million. (Incidentally, dividends on this investment to date cannot even pay Meyer's salary.) In an upcoming split, announced last fall, Marriott will become two different companies, Marriott International and Host Marriott of which the latter will absorb most of the company's $2.9 billion debt. The terms of this split, made clear in March, will stop dividends on the preferred stock and allow conversion...
That the HMC has shown poor descretion in this one investment is not really the issue, despite Meyer and Co.'s continued purchase of shares in Marriott even after the company announced in March that no further dividends would be paid. The stinging embarrassment for Harvard, one of the few institutions of higher learning that has the resources to boast an endowment management corporation, is that its financial performance is not even competitive with the average national university's endowment portfolio...
...fact, Harvard lost money on its sale of Marriott common stock because the stock's value went up instead of down. But it also made a profit of $4.1 million on the preferred stock it owns. Overall, Harvard's net profit on its investment in Marriott, as of June 4, was $485,200, according to Allen's ruling...
Terry Souers, a spokesperson for Marriott, praised the judge's decision and charged that Harvard's action constituted financial "greenmail" to prevent a necessary restructuring of the company...
Vice President for Finance Robert H. Soott yesterday referred questions on Marriott to Harvard Management Company President Jack R. Meyer, who is in charge of investing Harvard's endowment. Meyer refused to comment