Car­lyle to pay Ca­vanagh $7m a year as co-pres­i­dent

The Pak Banker - - COMPANIES/BOSS -

Car­lyle Group LP (CG) said it will pay JPMor­gan Chase & Co. (JPM) ex­ec­u­tive Mike Ca­vanagh $7 mil­lion a year for his first three years as co-pres­i­dent of the pri­vate-eq­uity firm.

Ca­vanagh will also re­ceive re­stricted shares val­ued at $32 mil­lion to com­pen­sate for JPMor­gan stock he gave up, as well as a stake in Car­lyle's fu­ture in­vest­ment prof­its, known as car­ried in­ter­est, the Wash­ing­ton­based firm said to­day in a reg­u­la­tory fil­ing. Ca­vanagh, 48, made about $17 mil­lion for his 2013 ser­vice at JPMor­gan, ac­cord­ing to a per­son with di­rect knowl­edge of the awards.

Car­lyle, the sec­ond-big­gest man­ager of al­ter­na­tive as­sets such as pri­vate-eq­uity funds and real es­tate, this week named Ca­vanagh co-pres­i­dent and cochief op­er­at­ing of­fi­cer along­side Glenn Youngkin, a 19-year vet­eran of the firm. The move is a loss for New York-based JPMor­gan, where Ca­vanagh was a close deputy of Chief Ex­ec­u­tive Of­fi­cer Jamie Di­mon and con­sid­ered a po­ten­tial suc­ces­sor at the largest U.S. bank.

Top pri­vate-eq­uity ex­ec­u­tives of­ten earn more on div­i­dends from their stock own­er­ship than in com­pen­sa­tion. Car­lyle's founders shared $279 mil­lion in 2013, with more than 99 per­cent of it in stock div­i­dends, ac­cord­ing to the firm's an­nual re­port filed with U.S. reg­u­la­tors last month. Youngkin, 47, took home $22 mil­lion last year, with $11.5 mil­lion of it in div­i­dends on his com­mon stock and part­ner­ship shares, the fil­ing shows.

Ca­vanagh, who will start at Car­lyle later this year, will get a $275,000 an­nual salary at Car­lyle, as well as a min­i­mum bonus of $2.725 mil­lion, a sign­ing bonus of $2 mil­lion and $2 mil­lion in re­stricted stock for each of the first three years. Car­lyle will also grant Ca­vanagh 933,416 re­stricted shares. The stock closed at $34.30.

The firm, founded in 1987 by Bill Con­way, Dan D'Aniello and David Ruben­stein, said it's cre­at­ing a long-term in­cen­tive pro­gram for Ca­vanagh, Youngkin and Adena Fried­man, the chief fi­nan­cial of­fi­cer. The plan will let them par­tic­i­pate in the firm's car­ried in­ter­est, to mo­ti­vate them to stay at the firm and in­crease deal gains, Car­lyle said in the fil­ing.

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