Schwarzman’s $425 Million Payout Leads Private Equity Titans

(Bloomberg) -- In an industry whose top executives don’t make small change, Steve Schwarzman once again took home the most money among private equity titans for the year.

The Blackstone Group LP co-founder received $378 million in dividends on his stock ownership in 2016, according to calculations based on the firm’s annual report filed Friday with U.S. regulators. Including his cut of deal profits, salary and other compensation, Schwarzman took home $425 million, down from $734.2 million the previous year.

Private equity executives are some of the wealthiest financiers, drawing most of their income from dividends on their ownership in the companies. The founders of the largest private equity firms -- Blackstone, Apollo Global Management LLC, Carlyle Group LP, KKR & Co., Oaktree Capital Group LLC, Fortress Investment Group LLC, Ares Management LP and TPG -- are all billionaires, according to the Bloomberg Billionaires Index.

KKR co-founders Henry Kravis and George Roberts took home $116.1 million and $119.4 million, respectively, in 2016, according to the firm’s report filed Friday. That’s less than the previous year, when Kravis got $165.9 million and Roberts received $172.9 million.

In 2016 each cousin earned a $300,000 salary and about $63 million in carried interest, or his share of investment gains. Each took home more than $52 million in dividends.

Walgreens, HCA

The dividends came out of KKR’s distributable profit, which rose to $1.53 billion last year from $1.45 billion in 2015. Sales of stakes in retailer Walgreens Boots Alliance Inc. and hospital operator HCA Holdings Inc. helped fuel the measure’s gain.

Blackstone’s distributable earnings slid to $2.18 billion last year from a record $3.84 billion in 2015.

Unlike at Blackstone and KKR, the founders of Carlyle and Apollo don’t take carried interest. Carlyle’s David Rubenstein received $73.1 million last year and Apollo’s Leon Black took home $131.9 million, almost all of it in stock dividends, according to firm filings last week.

Private equity executives have long lamented the prices of their stocks, arguing that public investors undervalue the firms’ streams of deal profits. In 2015 KKR instituted a fixed quarterly dividend instead of a payout policy that rises with profits, in an effort to grow its market value by investing more of its earnings in deals and new investment offerings.

Kravis and Roberts, both 73, founded New York-based KKR in 1976 with their partner Jerry Kohlberg, who left the firm in 1987 and died in 2015. The firm managed $129.6 billion in private equity holdings, credit assets, real estate and hedge funds as of Dec. 31.

Schwarzman, who turned 70 this month, started New York-based Blackstone in 1985 with Peter G. Peterson and has expanded it to be the biggest manager of alternative assets, overseeing $366.6 billion as of Dec. 31. In December, President Donald Trump tapped Schwarzman to be chairman of the strategic and policy forum, a group of business executives advising Trump on job creation and economic growth.

Peter Grauer, chairman of Bloomberg LP, the parent of Bloomberg News, is a non-executive director at Blackstone.

To contact the reporter on this story: Melissa Mittelman in New York at mmittelman@bloomberg.net.

To contact the editors responsible for this story: Elizabeth Fournier at efournier5@bloomberg.net, Devin Banerjee, Elizabeth Wollman