Big-Fund Execs Reap The Largest Rewards In 2012

  • Schwarzman, Black lead the pack
  • Many see big gains over 2011
  • Pressure to go public?

Black and Schwarzman ranked at the top of a lucrative compensation year for LBO firms, boosted by 2012’s fundraising level of $154.2 billion by U.S. buyout and mezzanine firms— the best year since the 2008 financial crisis—and a healthy 444 M&A exits by U.S. sponsors.

And the biggest players emerged with the largest slice of pay as they benefited from dividend or cash distributions from their ownership stakes in the mega-firms. Blackstone manages about $210 billion in assets, while Apollo Global Management ended the year with about $113 billion under management.

Leading the pack in 2012, Schwarzman netted about $213 million in total pay, about flat with 2011’s level, including a hefty $204 million in cash distributions, according to estimates by Thomson Reuters.

Black’s pay increased by more than 70 percent, or $75 million, to $180 million, over his 2011 compensation level of $105 million. In 2012, he made only $100,000 in salary, but his cash distributions added up to more than $179 million.

Henry Kravis and George Roberts of Kohlberg Kravis Roberts & Co. made $137 million and $141 million respectively, including a roughly $40 million boost each in their cash distributions. The pay figures for these big fund executives towered among their peers at large private- equity firms.

The median compensation for partner-level positions at large leveraged buyout firms totaled $6.1 million, including an estimated $750,000 in salary, $1.45 million in bonus and $3.9 million in carry distributions, according to the 2012-2013 Holt-Thomson Reuters Private Equity and Venture Capital Compensation Report.

As deal-making gains traction with a slow-but-steady rise in the U.S. economy, median compensation for private-equity and venture-capital professionals increased by 26 percent between 2011 and 2012, up from a 10 percent increase between 2010 and 2011.

As compensation gets fatter, pressure may be building for more private equity firms to hold initial public offerings as a way to provide payment in common units or stock.

Major LBO firms still private include Bain Capital, Cerberus Capital Management, Warburg Pincus, Advent International, and TPG Capital.

In 2012, Carlyle Group LP went public on May 4, while Oaktree Capital Group LLC held its IPO on April 12. Additional 2012 salary figures for Carlyle Group, Fortress Investment Group and Oaktree Capital Group and American Capital Group have yet to be publicly disclosed.