Blackstone Chief Schwarzman Receives $148.5 Million as 2011 Compensation

Stephen Schwarzman, chairman and chief executive officer of Blackstone Group LP (BX), received $148.5 million in pay and cash dividends in 2011, topping rivals at Carlyle Group and KKR & Co.

The Blackstone co-founder was paid a $350,000 salary and $4.6 million of his share of the firm’s profits, known as carried interest, the New York-based company said yesterday in a regulatory filing. He received $74 million in distributions from funds started before the company went public in 2007, and $69.6 million in cash dividends from his ownership of Blackstone stock.

Carried interest and its taxation has come under public scrutiny this year as U.S. lawmakers consider proposals to eliminate tax breaks that benefit some of the richest Americans. Mitt Romney, the former Bain Capital LLC CEO endorsed by Schwarzman, said last month his effective tax rate was 13.9 percent on income of $21.6 million in 2010, less than half the top rate on ordinary income.

Schwarzman, 65, told the CNBC cable network in September that he was taxed at 36 percent by the U.S. and 17 percent by state and local governments in 2010. He had a net worth of $4.7 billion as of September, making him the 66th wealthiest American, according to an estimate by Forbes magazine.

Real Estate

Blackstone isn’t required by the New York Stock Exchange, where its shares are listed, to have a compensation committee because the firm is considered a limited partnership. As a result, executive compensation is left in the hands of the executive committee of the board, which includes Schwarzman, President Tony James, Vice Chairman J. Tomilson Hill and Jonathan Gray, a senior managing director.

James, 61, was paid a total $41.1 million in 2011, including a salary of $350,000, a $26.2 million bonus and $12.8 million in cash dividends, according to the filing with the U.S. Securities and Exchange Commission. He collected $1.7 million in carried interest.

Gray, the head of global real estate, joined Blackstone’s board of directors this month after his business brought in $1 billion in profit in 2011, accounting for 71 percent of the firm’s profit last year. He joined Blackstone in 1992 after graduating from the University of Pennsylvania and became a senior managing director eight years later.

March Dividend

Gray, 42, received $36.5 million in 2011, including $350,000 in salary, a $21.4 million bonus based upon the performance of the real estate segment, $2.6 million in carried interest and $12.2 million in cash dividends, according to the filing.

Schwarzman, James and Gray are also set to receive $64.9 million, $9.5 million and $11.4 million, respectively, on March 30 from a premium dividend for Blackstone’s limited partners, according to the filing.

Though Blackstone said on Feb. 2 that 2011 profit fell 2 percent to $1.4 billion as performance fees and investment income declined, the firm ended the year with a record-high $136.8 billion fee-earning assets under management, up 25 percent from 2010. The firm deployed a near-record $16 billion in 2011 and returned $9 billion to investors, said James, Blackstone’s president.

Carlyle, KKR

Carlyle Group, the Washington-based private equity firm seeking to go public, said in a filing last month that its three founders received a combined $413 million last year. William Conway, Daniel D’Aniello and David Rubenstein each earned a $275,000 salary, a $3.55 million bonus and $134 million in distributions.

Schwarzman earned $398.3 million in 2006, the year before Blackstone went public.

KKR (KKR) said in a Feb. 27 filing that Henry Kravis and George Roberts, the firm’s co-founders and co-CEOs, received more than $94 million in pay and cash dividends in 2011, about 30 percent more than the year before. Almost all of their compensation was from carried interest, or their share of profits from the firm’s private equity funds.

To contact the reporter on this story: Devin Banerjee in New York at dbanerjee2@bloomberg.net

To contact the editor responsible for this story: Christian Baumgaertel at cbaumgaertel@bloomberg.net

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