Stephen Schwarzman, the founder of Blackstone Group, received record income of $1.1 billion in 2021 and was one of three insiders of the world’s largest private equity group to receive more than $160 million as its profits soared.
Schwarzman’s haul came primarily from around $940 million in dividends due to his ownership of nearly 20% of the private equity group’s stock. The figure scratches the surface of the wealth Schwarzman generated last year when Blackstone’s stock doubled.
His stock rose in value by $15 billion and Schwarzman earned another $150 million in ‘deferred interest’ compensation, highlighting how buoyant financial markets and the rush of investors to private funds create wealth without precedent in a less regulated corner of Wall Street.
To put the income Schwarzman received in 2021 into context, it was 55% more than the $615 million he received in 2020 and about 20 times that of JPMorgan chief executive Jamie Dimon, who leads the largest bank in the United States since 2005. Other Blackstone insiders also received multiples of what Dimon, the largest banking industry executive, earned.
Blackstone Chairman Jonathan Gray received nearly $325 million in salary and dividends in 2021, according to documents released by the company Friday evening, while Hamilton James, its recently deceased Vice Chairman, received more than $160 million. At current prices, Blackstone shares of Gray and James are worth $5.3 billion and $2 billion, respectively.
Joseph Baratta, the company’s head of private equity, and Michael Chae, its chief financial officer, received more than $55 million in 2021, a figure comparable to the compensation and dividend income earned by Dimon, and greater than that of the managing director of Goldman Sachs, David Salomon.
The sums underscore just how much the balance of power on Wall Street has shifted toward fast-growing alternative asset management firms, which can offer payouts to employees that dwarf the sums earned by traders and bankers. ‘investment.
Senior executives at private equity firms typically receive modest salaries relative to their entitlement to receive “carried interest,” giving them a share of the profits on successful investments. Founders and top executives like Schwarzman are also big shareholders, meaning they receive significant dividend income.
Blackstone’s distributable earnings, which pays out the majority of its earnings in dividends, rose 85% to $6.2 billion in 2021, enabling it to increase its dividend by 80%.
Blackstone’s roughly 3,800 employees collectively received $8.3 billion in salary and benefits, or about $2.2 million per employee, though this is skewed somewhat by the highest earners. The figure includes about $4 billion in cash compensation, stock awards and $3.7 billion in unrealized performance-based profits that depend on future asset sales and can fluctuate wildly, but not dividends. received by shareholders like Schwarzman.
Blackstone’s assets under management ended the year at a record $881 billion and it currently has nearly $9 billion in unrealized performance-based profits on its books, pointing out that wages could rise in 2022 if financial markets remain dynamic.
If Blackstone had sold all of its investments at year-end value, Schwarzman would have received $538 million in interest-based compensation, while Gray would have received $434 million. Blackstone’s partners also collectively received $47.5 million in tax revenue based on a “tax claim agreement” that is expected to pay them $1.6 billion over the next 15 years.
Blackstone said his salary was based on “long-term alignment with our investors.”
With additional reporting by Sujeet Indap and Mark Vandevelde in New York