THE THREE founders of Carlyle shared a $413 million payout last year focusing more attention on the extraordinary wealth earned by top private equity industry executives at a sensitive time in the US presidential election race.
Private equity already faces scrutiny for the way it has enabled executives, including Mitt Romney, frontrunner for the Republican nomination and former chief executive of Bain Capital, to build fortunes helped by a highly favourable tax perk.
The disclosure that David Rubenstein, Bill Conway and Daniel D’Aniello each received $138 million in pay last year was contained in documents filed with the Securities and Exchange Commission ahead of Carlyle’s planned initial public offering on Nasdaq in New York.
Carlyle, the Washington DC- based group renowned for its political connections, now manages $148 billion of investor money.
The trio, who founded Carlyle 25 years ago and retain about 60 per cent of the group’s equity, each received base pay of $275,000, a bonus of $3.5 million and $134 million from their investors’ profits, according to the filings.
The payout came in a year in which Carlyle invested about $10.6 billion and expected to return a record $17.8 billion to its investors, $12.4 billion from its private equity funds, according to letters sent to investors and seen by the Financial Times.
The primary source of income for the most successful private equity executives is carried interest, profits on investments made with money from outside investors such as pension funds.
Carried interest is treated as a capital gain, taxed at 15 per cent, rather than income, typically taxed at 35 per cent. – (Copyright The Financial Times Ltd 2012)
