Investment banks and traditional asset managers are starting to look more like Private Equity Companies may soon say how most people pay senior executives.
In the world of alternative assets, fund managers make a portion of their profits called “With interest“If they get the lowest returns, Goldman Sachs and BlackRock leaders will now get Similar awards As part of them compensationBoth companies announced this year that industry compensation experts expect these moves to be the beginning of emerging trends.
Bryan Liou, managing director of compensation consulting firm Johnson Associates, said it made sense for Goldman Sachs and Blackrock. Goldman Sachs have Under its supervision, more than $500 billion in private assets make it one of them Top 10 Investment banks use to justify carrying incentives in the world program For the CEO David SolomonPresident John Waldron and other company leaders.
Meanwhile, Blackrock has presented similar awards to the CEO Larry Fink. His company will manage more than $600 billion in private markets and alternative assets after a series of major acquisitions last year $3.2 billion Acquisition of ALT market data company PreQin.
Most importantly, Liu said, both companies told shareholders and competitors that they were very serious about their position in the private market.
“Now any company that is taking the alternative seriously will look at what Goldman Sachs is doing, what BlackRock is doing,” he told him. wealth“At least one question, should they do the same thing.”
Causing incentive controversy
If the trend does surface, it could trigger a major’s counterattack, Liu said Shareholder consultation The company provides guidance to clients on advice on administrative wages, corporate governance and other issues.
Institutional shareholder service, also known as ISS,,,,, Tell investors Voting against approving Larry Fink’s $31 million compensation package from 2024, saying the new carrying incentives (not distributed last year) add complexity without offsetting any other paycheck opportunities. Still, 67% of shareholders supported the compensation package in an unlimited vote last month, but it was still down from 90% that were typically hit last year.
At the same time, Goldman Sachs is here Under the fire Glass Lewis, a major agent adviser from ISS and other major agent adviser, had a stock retained bonus of $80 million for Solomon and Waldron. Investor support has dropped to its lowest level in nearly a decade.
But for Liou, bringing the carrying incentives into traditional finance is a way to ensure executive compensation, reflecting the company’s emphasis on alternative assets, a key source of future growth.
“If you look at the size of the awards these executives are paid for, it’s actually a relatively small percentage,” he said of BlackRock and Goldman Sachs’ carry incentives.
Of course, it has also caused controversy in politics. Like long-term capital gains, they are usually taxed at a rate of 20%. one Taxation level Meanwhile, currently 22%, suitable for any taxpayer who earns over $47,151; Steve Schwarzman, CEO of Alternative Assets giant Black Stone,,,,, Take it home It was nearly $900 million last year.
White House Press Secretary Karoline Leavitt said at the time that President Donald Trump said he wanted to end the “loophole”. But, Such measures There is a distinctive feature in the Republican spending bill that the Senate is considering.
Correction: This article corrects to reflect that BlackRock will manage $600 billion in private markets and alternative assets. The terminology used in previous versions of this story is not very accurate.
