May 30, 2023

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Carlisle boss resigns after request for $300 million wage package fails

Carlisle boss resigns after request for $300 million wage package fails

Carlisle Group Several people familiar with the matter said ousted CEO Kewsong Lee requested a salary package of up to $300 million over five years and quit the US private equity group after its founders refused to even discuss the deal.

Lee forged the deal during negotiations with his advisors and Carlisle This spring is ahead of planned talks with the board of directors over a new five-year contract. The stock-based pay package was tied to the performance of the shares of the private equity group.

The people said Carlyle’s billionaire founders Bill Conway and David Rubinstein and Daniel Daniele, who are both members of its board of directors, would not participate in talks about the proposal and did not respond to Lee’s detailed submission. This left Lee’s leadership in question and eventually led to the company’s decision to find a new leader.

shock me take off On Sunday it rocked one of the world’s most famous private equity groups, which manages $376 billion in assets. Shares in Carlisle have fallen more than 10 percent since the news broke, wiping out more than $1 billion from market capitalization.

Lately, like on Friday, Carlisle has been sending out invitations to dinner Mine It was scheduled to be hosted in New York in September.

Founders Carlyle Lee and Glenn Yongkin were appointed as co-CEOs, effective at the beginning of 2018, a move intended to show that a younger generation was taking charge. Lee took over when Youngkin – now Republican governor of Virginia – stepped down in 2020. His departure left Carlisle’s succession plans in shambles.

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His wage proposal was designed to bring his pay closer to his peers at KKR and Apollo Global, although it still lags behind its larger competitors, who manage more money and have a higher market capitalization.

Last year, he took home a total package of $42 million, the vast majority of which consisted of performance-driven stock awards. Of this, his annual salary was $275,000, plus a cash bonus of $5.5 million.

One person familiar with the details said that for Lee to earn the full $300 million under the new wage deal, Carlyle’s market value would have to nearly double in value.

While Lee’s new pay order has little precedent in corporate circles, it is tailored to what has become a new standard for the largest publicly traded private equity firms.

That explains the fact that the Carlyle was smaller than some of its competitors, the people familiar with the details said. KKR co-executives Joseph Bay and Scott Nuttall were awarded contracts in December that in a best-case scenario will pay out more than $1 billion in shares in a five-year period, according to filings.

Other companies including Apollo Global and TPG have given CEOs multi-year prizes that could be worth hundreds of millions of dollars if there is a big spike in stock prices.

Lee’s contract that he proposed, which would have paid him hundreds of millions of dollars if Carlisle had done well, also risked ending up at a lower value if its stock fell. It also required Carlyle’s share price to remain high in the later years of his decade.

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Lee’s attorneys and advisors were working directly with Bruce Larson, Carlyle’s chief human resources officer, on the proposed contract as Lee’s existing agreement was due to expire at the end of the year.

But talks continued, and Lee saw the lack of progress as evidence that the 70’s Carlyle founders — who founded the company in 1987 — were resuming a more active role and wanted to pick a new leader, people familiar with the details said.

On Sunday, Carlyle’s board of directors met and decided to take action, telling Lee that his employment agreement would expire at the end of the year. He submitted his resignation shortly thereafter. Conway becomes its interim leader as the group searches for a replacement.

Lee’s spokesman declined to comment. Carlisle also declined to comment.