Blackstone’s Schwarzman raises over $1 billion for the second year in a row

Stephen Schwarzman, founder of the Blackstone Group, posted record income of nearly $1.3 billion in 2022 as assets under management and earnings soared at the world’s largest private equity firm.

Schwarzman’s haul came mostly from more than $1 billion in dividend payments, as he owned nearly 20 percent of the private equity group’s stock. He also earned $190 million in carried interest payments as Blackstone completed asset sales, most of which were arranged before Russia’s full-scale invasion of Ukraine and rising interest rates sent stock markets into a tailspin.

Buoyed by Blackstone’s growing dividend, Schwarzman’s earnings exceeded the $1.1 billion the CEO received in 2021 by 15 percent, even though a 42 percent decline in Blackstone’s shares more than valued its holdings $12 billion cut.

Late last year, Blackstone shares were hit hard after the New York-based investment group forced investor redemptions from a fast-growing $71 billion real estate fund to raise cash.

The decision to cap payouts from the fund, called Blackstone Real Estate Income Trust, or Breit, cast doubt on Blackstone’s future growth and prompted equity analysts to lower their expectations for the company’s fee-based earnings. Similar Blackstone funds have also come under pressure from investors looking to withdraw money, the Financial Times reported.

Despite volatile conditions, Blackstone’s rising overall profitability helped other top executives take home nine-figure earnings, led by President Jonathan Gray, who received nearly $480 million in salaries and dividends in 2022, an increase of nearly 50 percent year-on-year corresponds to the files released on Friday.

Gray’s salary was supplemented by more than $78 million in Breit stock, which was delivered to him in early 2022 as a result of bonuses from the fund’s 30% profit in 2021.

“Significant portions of the listed compensation of our most senior executives relate to performance in 2021, which was paid based on the timing of the awards in the following year,” Blackstone said, adding that the incentive-based compensation was from the first half of 2022, when the company was in operation recorded “the highest period of liquidations in our history” in terms of asset sales.

Schwarzman and Gray’s earnings have dwarfed the salaries of investment banking executives. Schwarzman took home more than 30 times the salary of Jamie Dimon and David Solomon, CEOs of JPMorgan Chase and Goldman Sachs.

Joseph Baratta, the head of Blackstone’s private equity unit, and Michael Chae, its chief financial officer, received more than $50 million in 2022, once again surpassing the earnings of top bank executives.

Top executives of private equity firms typically receive modest salaries compared to their entitlement to carried interests, which share in the profits of successful investments. Founders and top executives like Schwarzman are also large shareholders, which means they receive sizable dividend income. Schwarzman and Gray shares are worth $20.6 billion and $3.7 billion, respectively, at current prices.

Blackstone’s distributable earnings, which pays out the majority of its earnings in the form of dividends, rose 7 percent last year to $6.6 billion.

Blackstone’s approximately 4,700 employees collectively received $3.5 billion in total wages and benefits, or nearly $1 million per employee, although this is somewhat skewed by top earners. That was down from 2021, when salaries and benefits topped $8 billion, or more than $2 million per employee.

The group’s assets under management ended last year at a record $975 billion and it has nearly $6.8 billion in unrealized performance-based gains on its books.

Blackstone said it has “a performance-based compensation model built on long-term alignment with our investors.”