New Carlyle CEO Harvey Schwartz in line for $180mn pay deal

Carlyle Group’s new chief executive Harvey Schwartz stands to make more than $180mn over the next five years, a package that would make him one of Wall Street’s highest-paid executives.

Schwartz, a former Goldman Sachs executive, will receive up to $108mn in performance-based stock awards to be paid in annual instalments should Carlyle’s shares rise by a specified amount over the five-year period, according to a securities filing released on Monday evening.

In addition, Schwartz, whose appointment was announced on Monday, is being granted $72mn in restricted stock awards that vest between 2024 and 2027, contingent on his continued employment at the New York and Washington-based investment group.

To earn the full award, Schwartz will have to meet share price performance targets that get harder over the five-year period, with the stock appreciating by more than double by 2028, according to the filings. Carlyle would also need to generate a total shareholder returns higher than 60 per cent of companies in the S&P 500 index every year.

Schwartz will also earn a $1mn annual base salary and be eligible for bonuses of up to $6mn annually. Should he earn the full amount, his pay would average over $40mn a year, significantly more than many other Wall Street executives, including David Solomon, the current chief executive of Goldman Sachs.

Solomon earned $25mn in 2022, a cut of almost 30 per cent compared with a year earlier.

However, the package is worth less than the $300mn deal that former Carlyle chief executive Kewsong Lee had been gunning for in contract negotiations that broke down last year, resulting in his abrupt exit.

In August, the Financial Times reported that Lee was requesting a five-year stock award that was also heavily tied to Carlyle’s stock price, with the full amount paying out if it doubled.

Carlyle’s billionaire co-founders Bill Conway, David Rubenstein and Daniel D’Aniello, who sit on its board, would not engage in talks on the proposal and did not respond to the submission, the FT reported.

If Carlyle’s stock stagnates or falls over the next five years, Schwartz will be paid substantially less.

The arrangement mirrors the stock awards granted to top executives at rival private equity firms KKR and Apollo Global, although it is smaller in size, reflecting the fact that Carlyle manages less money and has a smaller market capitalisation.

KKR co-chief executives Joseph Bae and Scott Nuttall were given deals in December that will, in a best-case scenario, pay out more than $1bn in stock in a five-year period, according to filings.

Other firms including Apollo Global and TPG have granted top executives multiyear stock awards that could be worth hundreds of millions of dollars.

Carlyle has also agreed to pay Schwartz up to $19.5mn in stock grants he will have to forfeit from his former employer Goldman Sachs.

The overall compensation package can be terminated if Schwartz is fired. It will also vest within two years if Carlyle is sold to a competitor, the filing said.