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BlackRock is awarding CEO Larry Fink the sweetener of interest for the first time, highlighting the growing importance of the private market for the world’s largest asset managers.
The 11.6TN group said on Friday it agreed to pay founders a percentage of carry distribution related to the performance of the group’s funded flagship private market investment funds last year.
The incentives “to further align CEO compensation with both the evolution of BlackRock’s private market platform and the related creation of long-term shareholder value” and “corresponding expansion” of FINK’s executive liability, which adopted the $28 billion contract. “It suits both.” Last year I’m in a hurry.
Advantageous interest generally refers to the share of profits that arise in managers of so-called alternative funds, such as private equity or hedge funds.
“Carries” are, as is known, taxed favorably at long-term capital rates. This tends to be lower than the normal income rate. In the US, carry is usually taxed at a 20% rate compared to the highest federal income tax rate of 37%.
While most banks and traditional asset managers can use carry to reward fund managers, it is very unusual to include it in the payments of CEOs in those industry.
However, BlackRock’s decision to award Fink Carry follows a similar move by Goldman Sachs, and last month, based on the performance of the alternative asset fund in addition to stocks and cash, Time’s CEO David He handed over a bonus from Solomon and President John Waldron.
The carry incentive will be added to Fink’s annual salary from the 2024 year-end compensation package, the submission said.
This move has been rushed to grow rapidly in private assets, expand its share of favorable markets, and diversify beyond low-cost ETFs and index products that are bread and butter. It reflects the way it is.
Last year, BlackRock announced three transactions related to the private market. With the $12.5 billion purchase of Global Infrastructure Partner, which was closed in the fourth quarter, he became the world’s second largest private infrastructure assets manager.
In June, it announced its acquisition of UK private market data group Preqin for £25.5 billion. It then closed in December with a $12 billion deal for private credit manager HPS Investment Partners. These two transactions are expected to be completed by mid-2025.
Large asset managers and banks have started paying senior leaders, just like major private equity companies, and are trying to strengthen their ability to attract and retain talent.
Earlier this month, Donald Trump told lawmakers he wanted to set up a potential conflict with America’s wealthiest investors, saying he wanted to end the special tax treatment that had been carried interest.
