Need To Know: SEC Presses Blackstone On Pay

SEC Presses Blackstone On Pay

The Securities and Exchange Commission has asked The Blackstone Group for more detail on how its executives are paid, according to sister news service Reuters, which cited regulatory filings recently made public.

In an April 25 letter, officials at the SEC said that Blackstone appears to use “several factors to determine a baseline award” for executives and determines an “indicative participation interest” for each individual executive officer. “These figures are then subject to adjustment by (CEO Stephen) Schwarzman in his sole discretion,” according to the filing.

The SEC asked that in future filings, Blackstone detail the nature of “individual performance factors” of each executive.

Blackstone answered in a May 9 letter that these figures are “internal measures which are applied to a number of complex individual businesses and partnerships.” The firm also said it took into consideration variables such as fund performance, economic performance and Blackstone’s success in hitting strategic objectives.

2011 Another Bad Year For LPs: Study

2011 will likely be the fourth-straight cash-negative year for most investors in private equity funds, according to a recent Triago report.

While noting that a growing number of limited partners are receiving net cash from investments and general partners are locking in significant carried interest, the private equity advisory firm said that the private equity market is one of “haves” and “have nots.”

“Overall, private equity remains burdened by poorly performing investments made at the height of the credit bubble from 2005 to 2008,” founder Antoine Dréan wrote in an introduction to the report. “These vintages hold the bulk of private equity’s dry powder and most of its unrealized investments. The impact these overhangs have on investors raise questions about everything from fundraising to investment processes and fund strategy.”

Corps Deploying Cash But Not Fast Enough: Survey

Corporations and other strategic buyers are starting to spend some of the of the cash they hoarded in recent years through acquisitions and capital expenditures that could provide a much-needed boost to the economy, according to The Wall Street Journal, citing a survey the Association for Financial Professionals conducted in May. Still, because the companies have slashed expenses in recent years, “the cash is still piling up faster than most are able or willing to spend it,” the Journal noted.

That could mean even more competition for private equity firms, which are facing fierce competition from strategic buyers in auctions, as Buyouts has previously reported. In the survey, half of the responding executives said their cash balances would hold steady over the next 12 months, 29 percent said the balances would increase and 21 percent said the balances would contract. Nearly half the executives planning to reduce their cash levels said they would do so by spending to expand their businesses rather than paying down debt.