- Edens, Nardone reap largest-ever bonuses since 2007 IPO
- Firm's profit declined 12%, shares slumped 31% during year
Fortress Investment Group LLC paid its three top executives bonuses worth a combined $43.8 million last year as the company’s shares fell 31 percent, including reinvested dividends.
Co-Chairmen Pete Briger and Wes Edens received $22.6 million and $12.7 million, respectively, under the firm’s principal compensation plan, the bulk of it paid out in cash and the remainder in restricted stock, according to a proxy statement filed Friday with U.S. regulators. Chief Executive Officer Randy Nardone’s bonus for the year was $8.5 million. It’s the largest bonuses for Edens and Nardone since the New York-based company went public.
Since 2011, Fortress’s principals have been paid based on formulas tied to the performance of certain investment vehicles, according to the proxy.
Fortress, founded in 1998, became the first private equity and hedge fund manager to sell stock to the public when it held a February 2007 initial public offering at $18.50 a share. The stock traded at $4.56 on Friday.
The firm, which oversaw $70.5 billion in fee-paying capital as of Dec. 31, disbanded its macro hedge fund last year after almost two years of losses and a spate of redemptions since 2007 shrank the fund’s assets by more than three-quarters to $1.8 billion. Mike Novogratz, who oversaw the fund and Fortress’s liquid markets strategies, left.
Fortress’s largest private equity fund, overseen by Edens, was producing a 7 percent annualized return as of the end of 2015, compared with 6.2 percent a year earlier and 4.1 percent at the end of 2013, according to the firm’s annual report. The fund managed $4.4 billion as of Dec. 31.
Earnings for Fortress’s fastest-growing segment, a group of six publicly traded private equity vehicles, which Edens leads, surged 156 percent to $105 million last year. Performance of funds managed by Edens “improved overall in 2015 compared to 2014,” Fortress said in the proxy.
Briger’s main credit hedge fund, called Drawbridge Special Opportunities, generated a 5.8 percent return for 2015, compared with 10 percent the previous year and 19 percent in 2013. The pool had $4.3 billion in assets as of Dec. 31. Returns weren’t available for the most recent private equity-style credit fund he oversees, which started last year, because it’s too early in its investment period, according to the report.
“In 2015, weaker performance of eligible credit hedge funds was partially offset by improved performance of eligible credit PE funds,” Fortress said.
Fortress generated $391 million in pretax distributable earnings last year, down 12 percent from 2014.
In addition to $200,000 salaries, Briger and Edens also received company-paid Internet security services in the amounts of $291,424 and $341,058. At least half of the cash portion of any bonus payments net of taxes must be invested in the company’s funds.
A spokesman for Fortress declined to comment beyond the proxy.