Blackstone Schwarzman receives more than $1 billion for the second year in a row

Blackstone Group founder Stephen Schwarzman is on track to post record earnings of nearly $1.3 billion in 2022 as assets under management and profits rose at the world’s largest private equity firm.

Schwarzman came mainly from more than $1 billion in dividend payments, attributable to nearly 20 percent of the private equity group’s shares. He also earned a $190 million “carried interest” payment when Blackstone completed asset sales, most of which were made before Russia’s full-scale invasion of Ukraine and rising interest rates weighed on equity markets.

Thanks to Blackstone’s growing dividend, Schwarzman’s earnings were 15 percent higher than the CEO’s $1.1 billion in 2021, even as a 42 percent drop in Blackstone’s stock reduced the value of his stake by more than $12 billion.

Blackstone’s shares were hit hard late last year after the New York-based investment group limited investor redemptions from a fast-growing $71 billion real estate fund as wealthy individual investors pulled money amid concerns about the long-term health of the real estate market. the need to withdraw cash.

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The decision to limit withdrawals from a fund called Blackstone Real Estate Income Trust, or Breit, cast doubt on Blackstone’s future growth and stock analysts lowered their expectations for the firm’s fee-based earnings. Similar Blackstone funds have also faced pressure from investors seeking to withdraw money, reports the Financial Times.

Despite volatile conditions, Blackstone’s growing overall profitability helped other top executives earn nine-figure earnings, led by Chairman Jonathan Gray, who received nearly $480 million in salary and dividends in 2022, a nearly 50 percent increase from the previous year. to the announcements published on Friday.

Gray’s salary was bolstered by more than $78 million worth of Breit stock, which was awarded to him in early 2022 as a result of bonuses from the fund’s 30 percent gain in 2021.

“A significant portion of our top executives’ listed compensation is performance-related in 2021, which was paid the following year due to vesting,” Blackstone said, adding that the incentive-based pay would begin in the first half of 2022, when the company. recorded the “highest realization period in our history”, referring to asset sales.

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The income generated by Schwarzman and Gray dwarfed the salaries of investment banking executives. Schwarzman took home more than thirty times the salary of Jamie Dimon and David Solomon, CEOs of JPMorgan Chase and Goldman Sachs.

Blackstone’s head of private equity Joseph Baratta and chief financial officer Michael Chae received more than $50 million in 2022, again surpassing the earnings of top banking executives.

Executives at private equity firms typically receive modest salaries compared to their entitlement to “carrying interest,” a share of the profits of successful investments. The founders and senior executives, such as Schwarzman, are also large shareholders, which means they receive substantial dividend income. Schwarzman and Gray’s shares are worth $20.6 billion and $3.7 billion, respectively, at current prices.

Blackstone, which pays out most of its profits in the form of dividends, grew its distributable earnings by 7 percent to $6.6 billion last year, allowing it to pay a dividend of $4.40 per share.

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Blackstone’s roughly 4,700 employees collectively received $3.5 billion in total wages and benefits, or nearly $1 million per employee, although that is skewed somewhat by the top earners. That’s down from 2021, when salary and benefits topped $8 billion, or more than $2 million per employee.

The group’s assets under management closed last year at a record level of $975 billion, and it has nearly $6.8 billion in unrealized performance-based profits on its books.

According to Blackstone, it has a “performance-driven compensation model built on long-term alignment with our investors.”