Blackstone’s Goodman Gets $200 Million Grant as GSO Grows

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Blackstone Group LP is awarding Bennett Goodman, co-founder of its GSO Capital Partners credit fund unit, about $200 million to give him a larger stake in the company and encourage him to stay until he reaches retirement age.

The world’s largest private equity firm granted Goodman more than 5 million restricted shares during the first quarter when he was added to the board, according to regulatory filings. Goodman, 58, would have to remain at the New York-based firm for another eight years to collect the entire award, a person familiar with the matter said.

Goodman’s stock bonus coincided with other changes to the compensation structure made this year at GSO Capital. Assets at the unit have soared more than sevenfold to $75 billion since Blackstone acquired the credit fund manager in 2008 to diversify beyond leveraged buyouts and real estate investing. The changes, disclosed in filings as recently as last month, are meant to more closely tie the compensation GSO executives receive to Blackstone’s share price.

About 15 percent of Goodman’s grant represents payments tied to Blackstone’s purchase of GSO Capital in 2008, said the person, who asked for anonymity because some of the information hasn’t been disclosed publicly.

Blackstone purchased GSO Capital for $620 million in cash and stock up front, agreeing to pay its owners as much as $310 million more if the credit unit met earnings targets over the ensuing five years. GSO initially stumbled amid the subprime mortgage debt meltdown, recording a net loss of $1.17 billion in 2008, before rebounding to contribute to Blackstone’s profits as well as its asset growth.

Director Role

Goodman, who co-founded GSO Capital in 2005 with Doug Ostrover and Tripp Smith, heads the unit. He was named to Blackstone’s board on Feb. 24, the same month Blackstone settled an obligation to make further earn out payments to him and the other former GSO owners stemming from the acquisition, according to a May 8 filing with the U.S. Securities and Exchange Commission. Goodman received 798,166 Blackstone restricted units under this agreement, an earlier filing shows.

Blackstone awarded Goodman the remaining 4.2 million restricted units during the first quarter under an executive retention program, according to the person with knowledge of the matter. The restricted securities are exchangeable for Blackstone’s publicly listed partnership units, currently trading at about $42 each, on a 1-for-1 basis.

Goodman will take ownership of the award in stages, as the shares covered by the award vest over the next eight years, the person said. Should Goodman leave before the period ends, he would forfeit any shares that have yet to vest.

Blackstone said last month that Ostrover was leaving GSO to start a family office. He will remain a senior adviser to Blackstone.

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