CalPERS, Mubadala deals cap Carlyle chiefs' bonuses

An agreement originally relating to CalPERS' stake purchase limits firm founders' bonuses, which were revealed in an amended IPO registration document filed this week.

The Carlyle Group's founders can collect no more than $3.5 million each in annual bonuses, in line with the agreement it forged with the California Public Employees’ Retirement System in 2001 for a 5.5 percent stake in its management company.

The agreement to limit the annual bonuses was meant to “ensure that the interests of our founders would be aligned with [CalPERS] own”, the firm said in a recent filing with the US Securities and Exchange Commission. It sold the stake to CalPERS for about $175 million.

Abu Dhabi’s sovereign wealth fund, Mubadala, bought a 7.5 percent stake for $1.35 billion in Carlyle in 2007 and received the same agreement as CalPERS, the firm said in the filing. Mubadala increased its stake in Carlyle in 2010.

Carlyle declined to comment.

The filing, which amends an earlier filing related to the firm’s intent to publicly list its management company, also revealed compensation for the firm’s executive management.

Founders David Rubenstein, Daniel D’Aniello and William Conway collected big payouts, according to the filing, taking in about $134 million a piece in cash distributions from the firm. The founders also each received about $3.8 million in total compensation in 2011, consisting of base salaries of $275,000, bonuses of about $3.5 million and compensation in the form of retirement account contributions from the firm.

Chief operating officer Glenn Youngkin was paid a $3 million bonus plus the $275,000 base salary and Adena Friedman, who the firm hired earlier this year as chief financial officer from NASDAQ, made $1.9 million in bonuses on top of a $200,961 base salary.

Friedman will be part of a group of high-level private equity executives speaking at Private Equity International’s CFOs & COOs Forum in New York City being held on 19 and 20 January. Private Equity International, in partnership with sister publication Private Equity Manager, will also reveal the results of an annual firm compensation survey at the forum. Click here to take the survey.

Carlyle's founders have contributed significant amounts of their own money to Carlyle funds, according to the filing. Since inception, senior executives, senior advisors and other professionals have invested or committed to invest more than $4 billion in or alongside the firm’s funds,  the firm said.

The filing also revealed that Carlyle will file on the NASDAQ exchange, rather than the New York Stock Exchange, which is where other publicly listed private equity firms Kohlberg Kravis Roberts and The Blackstone Group filed. Carlyle’s ticker symbol will be “CG”.

Carlyle chose NASDAQ based on the services it offers, as well as its fees, which are thought of as lower than other exchanges, according to a person with knowledge of the process. Several of the firm's portfolio companies have listed on the NASDAQ, the person said.