Blackstone slaps golden handcuffs on Bennett Goodman
Sweetened deal comes after other original GSO partners have left the credit unit
Mark Vandevelde in New York and Robert Smith in London
The sweetened deal with Bennett Goodman provides faster vesting of a $200m share award dating from 2015 © Reuters
Blackstone has slapped golden handcuffs on one of its most senior executives, Bennett Goodman, in a bid to prevent the co-founder of the investment group’s $130bn credit business from following his two original partners out of the door.
The sweetened deal, agreed in November, provides faster vesting of a $200m share award dating from 2015, when Mr Goodman joined Blackstone’s board of directors. He has also been promised that he will not be paid less than Dwight Scott, a former underling who was named president of the credit unit in 2017.
It comes as Mr Goodman’s fellow GSO co-founders, both of whom have already left Blackstone, press on with their own investment platforms — in at least one case luring a former senior Blackstone colleague to help build the new firm.
In addition to providing financial assurances, Mr Goodman’s new deal guarantees him five weeks’ holiday a year and promises a package of benefits that will match whatever Blackstone offers its other senior managing directors, with the exception of chief executive Stephen Schwarzman.
The unique package of Mr Schwarzman, who founded Blackstone in 1985, allows him to keep his current office in Blackstone’s midtown headquarters even after he retires and has been promised free access to a car and driver for the rest of his life.
Mr Goodman cut his teeth at junk bond king Michael Milken’s Drexel Burnham Lambert in the 1980s. He founded GSO with Tripp Smith and Doug Ostrover in 2005, selling the firm to Blackstone in 2008 for about $1bn.
Since then, GSO has become one of the biggest, most profitable alternative credit providers, helping Blackstone become a diversified financial giant. The firm now manages more money in debt investments than in its traditional buyout funds, and traders say the firm has enough heft to displace top banks such as Goldman Sachs, which once called the shots in financial markets.
The changes to Mr Goodman’s pay, which also offer him new sweeteners for five years after he retires from Blackstone, were made at a time of increased speculation about the future of GSO’s only remaining founder.
Mr Ostrover left in 2015 and has since formed Owl Rock alongside former dealmakers from investment bank Goldman and rival private equity firm KKR. The fledgling firm has written $8.6bn worth of loans so far, focusing on medium-size private equity-backed companies.
Mr Smith left last year and is in the early stages of raising his own rival credit fund. He has already poached at least one other senior GSO executive. The credit fund manager’s chief operating officer George Fan, who had been with GSO since its inception in 2005, left his role at the start of the year, and has agreed to join Mr Smith’s new firm, according to two people familiar with the matter.
Mr Smith did not immediately respond to a request for comment.
Under the new deal Mr Goodman’s shares will vest four times a year instead of annually, a concession that companies often use to persuade executives to defer decisions about a potential departure. Mr Goodman’s shares vest over an eight-year period ending in 2023.
A person close to Mr Goodman said he was happy at Blackstone and has no intention of joining Mr Smith or Mr Ostrover.
One person close to GSO said there had been a “changing of the guard” at the top of the firm over the past year, noting a string of senior departures in the group’s once imposing distressed debt unit. Blackstone has looked to move away from the often controversial practices this unit became best known for, particularly after an aggressive trade involving the debt of homebuilder Hovnanian drew the ire of US regulators last year.
As part of the changes, Mr Scott, a former investment banker who was chief financial officer of energy group El Paso Corporation before joining GSO in 2005, has also taken on a more visible role.
He has led efforts to seed new products with capital from major clients, according to a person with knowledge of the discussions, who added that until recently negotiations of this type were usually led by Mr Goodman.
Blackstone’s deal with Mr Goodman, which it called a “new multiyear retention arrangement”, has been made public in company filings under rules requiring disclosure of material contracts involving a company’s directors. Mr Goodman’s previous deal, struck before he became a director, has not been disclosed.
0 comments:
Publicar un comentario