Carlyle Group’s New CEO and Pay Structure: A Win for Employees

Carlyle Group’s New CEO and Pay Structure Shake-Up

Carlyle Group, a prominent investment firm, is experiencing a period of significant change with the appointment of a new CEO and a revamped pay structure that is garnering attention. The new CEO, Harvey Schwartz, formerly the COO of Goldman Sachs, has taken the reins at Carlyle, bringing with him a fresh perspective and vision for the company’s future.

In addition to the leadership change, Carlyle has implemented a new pay setup that is proving to be beneficial for its employees. Following in the footsteps of rival funds like Apollo and KKR, Carlyle has shifted its compensation model to allocate a higher proportion of pay in carried interest, a form of payment given to senior employees when investments are successfully exited.

The impact of this change is already evident in Carlyle’s first quarter results, which show a decrease in spending on salaries and bonuses for private equity professionals, offset by a significant increase in carried interest payments. This shift has resulted in a net increase in compensation spending, driven by the surge in carried interest payments, which also enjoy favorable tax treatment.

Looking ahead, Carlyle anticipates further growth in investment exits as the IPO market expands, leading to even higher carried interest payments for its employees. While this increase in compensation spending could be attributed to recent hiring efforts, it is more likely a strategic move by Schwartz to align the company’s incentives with the success of its investments.

While senior employees stand to benefit from the new pay structure, junior staff members may have mixed feelings as they typically receive only a salary and bonus. Nevertheless, Carlyle’s bold move towards compensating in carried interest appears to be paying off, setting the stage for a promising future under the leadership of Harvey Schwartz.