Schwarzman’s Timing Remains Exquisite

Blackstone Groups move to go public has turned out well, at least for shortsellers and voyeurs.

But the bounce in the stock since earnings were released has made a short term loser of shorts. And none of the SellSide analysts following BX cut their ratings in the wake of the announcement; the situation was tailor made for an analyst capitulation to "sell" which might have been a chance to buy. A truly rare case of intestinal fortitude for the analysts.

But the pain on Wall Street is hitting everyone. Even Steve Schwarzman's compensation is down, and it might get worse:

Co-founder and chief Stephen Schwarzman received $350.2 million in cash distributions last year, a 12% pay cut from 2006, when he received $398.2 million in cash distributions....Schwarzman and others could be forced to return money to the funds. If future asset sales in Blackstone private-equity portfolio turn south, the funds have a “clawback” feature that requires the company to refund investors already-booked incentive fees. “In the good times the private-equity business model is the best deal going,” Johnson says. “But these current payouts don’t reflect some of the potentially troubled transactions from the past two years.” Dealjournal

Blackstone has had the fair share of troubled transactions, and we are a long way from August when Blackstone was considering bailing out subprime deals gone wrong.

Still, Blackstone’s Chinese investors might not be too pleased with Steve’s compensation; they have lost about as much money as Steve was paid in 2007, and have never really been up on their investment.

The publicity over Schwarzman’s recent $100 million donation to the New York Public Library was no doubt timed to coincide with Blackstone’s filing; too the recent adventure of Eliot Spitzer makes Steve’s day-to-day routine seem a little dull, and has kept him off the front page.

Once again, well timed, Steve.

Blackstone’s Partners: Still Living Large
Dealbook
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