Hullabaloo

Saturday, March 02, 2013

 
"When private equity works, it really works"

by digby

Remember this guy?

“It’s a war,” Schwarzman said of the struggle with the administration over increasing taxes on private-equity firms. “It’s like when Hitler invaded Poland in 1939.”

That was July of last year. Today?

“When private equity works, it really works,” Schwarzman said on a Jan. 31 conference call while discussing the year’s earnings. “And our credit business had a truly standout year.”

Indeed, it did. For him:

Stephen Schwarzman, co-founder and chief executive officer of Blackstone Group LP (BX), received $213.3 million in pay and cash dividends last year, almost matching his payout of $213.5 million a year earlier.

Schwarzman, 66, was paid a $350,000 salary and $8.1 million from his share of the firm’s profits, known as carried interest, the New York-based company said today in a filing with the U.S. Securities and Exchange Commission. He got $204 million in cash dividends from his ownership of Blackstone stock.

The co-founder also received $800,000 in distributions from funds started before the company went public in 2007, called legacy funds. That amount was $74 million in 2011.

The world’s largest private-equity firm isn’t required by the New York Stock Exchange, where its shares are listed, to have a compensation committee because Blackstone is considered a limited partnership. As a result, executive compensation decisions are left to Schwarzman, who is chairman of the company’s board of directors.

Blackstone’s economic net income, a measure of profit excluding some costs tied to its 2007 initial public offering, rose 30 percent to $2 billion in 2012 from the previous year, marking the best performance since the IPO, the firm said in January. The increase was driven by the 14 percent gain in the value of Blackstone’s private-equity funds, outpacing the 13 percent gain in the MSCI All-Country World Index (MXWD), and a doubling of revenues from its credit investments.

He is the poster boy of the carried interest perk that allows greedheads like him to pay half of what everyone else pays in taxes.

He founded Blackstone Group along with none other than Pete Peterson. I'm sure they've chatted often about how important it is that we close the deficit which requires that everyone have "skin in the game" and share the "sacrifice." For the grandkids, dontcha know.

This is one of the loopholes they seek to close in exchange for "smart cuts" to Social Security. I have a sneaking suspicion that eventually Mr Schwarzman can be relied upon to find other ways to protect his fortune from the looters. He obviously has many resources at his disposal. And in any case, it's not as if his "skin in the game" will translate into any personal hardship. Social Security recipients not so much.


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digby 3/02/2013 02:00:00 PM