UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
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The Carlyle Group Inc.
1001 Pennsylvania Avenue, NW, Washington, DC 20004
Notice of 2023 Annual Meeting of Shareholders
ITEMS OF BUSINESS
•ITEM 1. Election to our Board of Directors of four Class III director nominees named in the attached Proxy Statement for a three-year term
•ITEM 2. Ratification of Ernst & Young LLP (“Ernst & Young”) as Independent Registered Public Accounting Firm for 2023
•ITEM 3. Management Proposal to Reorganize the Board of Directors into One Class
•ITEM 4. Approval of The Carlyle Group Inc. Amended and Restated 2012 Equity Incentive Plan
•ITEM 5. Non-Binding Vote to Approve Named Executive Officer Compensation (“Say-on-Pay”)
•ITEM 6. Shareholder Proposal to Implement a Simple Majority Vote Requirement in Our Governing Documents
•Transaction of such other business as may properly come before our 2023 Annual Meeting of Shareholders
| DATE & TIME | 9:00 a.m. EDT | ||||
| Tuesday, May 30, 2023 | |||||
| ACCESS | Our Annual Meeting can be accessed virtually at: | ||||
| www.virtualshareholdermeeting.com/CG2023 | |||||
| RECORD DATE | April 3, 2023 | ||||
Your vote is important to us. Please exercise your shareholder right to vote.
By Order of the Board of Directors,
/s/ Anne K. Frederick
Anne K. Frederick
Corporate Secretary
April [●], 2023
Important Notice Regarding the Availability of Proxy Materials for our Annual Meeting to be held on Tuesday, May 30, 2023. Our Proxy Statement and 2022 Annual Report to Shareholders are available at www.proxyvote.com. On or about April [●], 2023, we will distribute the proxy materials and send to certain of our shareholders a Notice of Internet Availability of Proxy Materials (“Notice”). The Notice includes instructions on how to access our Proxy Statement and 2022 Annual Report to Shareholders and vote online. For more information, see Frequently Asked Questions. | ||
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Table of Contents
This proxy may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These statements include, but are not limited to, statements related to our expectations regarding the performance of our business, our financial results, our liquidity and capital resources, contingencies, our dividend policy, and other non-historical statements. You can identify these forward-looking statements by the use of words such as “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “should,” “seeks,” “approximately,” “predicts,” “intends,” “plans,” “estimates,” “anticipates” or the negative version of these words or other comparable words. Such forward-looking statements are subject to various risks, uncertainties and assumptions. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements including, but not limited to, those described under the section entitled “Risk Factors” in our Annual Report on Form 10-K filed with the United States Securities and Exchange Commission (the “SEC”) on February 9, 2023, as such factors may be updated from time to time in our periodic filings with the SEC, which are accessible on the SEC’s website at www.sec.gov. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this report and in our other periodic filings with the SEC. We undertake no obligation to publicly update or review any forward-looking statements, whether as a result of new information, future developments or otherwise, except as required by applicable law. | ||
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LETTER FROM OUR CHIEF EXECUTIVE OFFICER
 | Dear Shareholders, We are pleased to invite you to the 2023 Annual Meeting of Shareholders of The Carlyle Group Inc., to be held virtually on Tuesday, May 30, 2023. Our proxy materials include a notice setting forth the items we expect to address during the meeting, our Proxy Statement, a form of proxy and a copy of our 2022 Annual Report to Shareholders. Your vote and representation are important to us. Even if you are unable to attend the meeting, we hope you will exercise your vote. | ||||
Included in our Annual Report is our 2022 Letter to Shareholders, where Bill Conway and I discuss the firm’s strong financial performance despite extraordinary geopolitical and economic challenges, and our continued progress against our growth objectives to drive long-term shareholder value. As a reference for the meeting, 2022 performance information can be found in our Annual Report to Shareholders, and on Carlyle’s Investor Relations website https://ir.carlyle.com. Thank you for your continued support of Carlyle and I look forward to engaging with our shareholders during our Annual Meeting. /s/ Harvey M. Schwartz HARVEY M. SCHWARTZ Chief Executive Officer and Director April [●], 2023 | |||||
CARLYLE Proxy Statement 2023 | 1 | ||||
LETTER FROM OUR BOARD OF DIRECTORS
 | Dear Fellow Shareholders, It is my pleasure to write to you on behalf of the Board of Directors. As discussed in detail in our 2022 Annual Report, Carlyle delivered strong financial results in 2022 amidst a challenging economic and geopolitical backdrop. We also continued to grow and diversify our business. Our global team of over 2,100 professionals remained focused and dedicated despite the challenges in the market to deliver attractive results for our stakeholders. | ||||
The Board’s top priority during the second half of 2022 was the recruitment of a new Chief Executive Officer. Our search successfully concluded early this year when the Board and Carlyle announced Harvey Schwartz as Chief Executive Officer and a member of the Board. The Board’s comprehensive search began with a detailed specification identifying the most important aspects of the Chief Executive Officer role and defining the key attributes and professional experience that we were looking for in a leader. A search committee met weekly with our executive search consultants to review an extensive list of highly qualified prospective leaders. We narrowed this group and interviewed and evaluated a short list of exceptional candidates, considering our desired specifications and attributes. Mr. Schwartz was the unanimous choice of the search committee and the entire Board of Directors. We are thrilled to have the benefit of Mr. Schwartz’s dynamic energy, team-oriented track record and financial expertise to lead our people and drive our strategy. He brings extensive experience leading and growing a wide range of complex global businesses through challenging times, and he demonstrated a strong conviction in the strength of Carlyle’s brand and culture. We expect that his background as a seasoned operator and proven ability to attract and develop high performing talent will help Carlyle identify and capture opportunities across market environments. Another key priority for the Board in 2022 was continuing to enhance our corporate governance practices on behalf of our stakeholders. Since our initial public offering in 2012, Carlyle has been on an evolving journey to improve our governance profile. We began as a publicly traded partnership where our limited partners could not vote for directors and then became a controlled corporation where insiders held a majority of the voting power. Today, Carlyle is a corporation with more than half of our shares owned by the public, a majority-independent Board and fully independent Audit, Compensation and Nominating and Corporate Governance committees. Under the leadership of the Board, Carlyle was a first mover among our main peers to give full pro rata voting rights to our shareholders. In 2020, Carlyle became the first U.S.-based alternative asset management firm to convert to a one share, one vote structure, providing shareholders with a simple and transparent corporate structure and further aligning our interests with shareholders. During 2022, we fully completed our transition away from being a “controlled company” within the meaning of the Nasdaq corporate governance standards. We have backed up our commitment to governance with action—at last year’s Annual Meeting, we supported a shareholder proposal to declassify our Board of Directors and at this year’s Annual Meeting, we | |||||
2 | CARLYLE Proxy Statement 2023 | ||||
Letter from Our Board of Directors
are recommending that shareholders vote in favor of a proposal to change the company’s certificate of incorporation to implement the declassified Board structure. If approved, our shareholders will have the ability to elect directors to one-year terms, which will increase our accountability to shareholders. The Board is proud of the progress we have made and remains steadfast in our focus on continuing to improve our corporate governance practices over time. The Board also has focused on Board refreshment and increasing the number of independent directors on the Board. During the past two years, we have added three new independent directors. In 2021, Derica Rice, a veteran healthcare executive, joined the Board, and in 2022, Linda Filler, a skilled retail executive, and Mark Ordan, a seasoned executive in several industries, both joined the Board. Harvey Schwartz also recently joined the Board in addition to his role as Chief Executive Officer. These efforts have reshaped our Board to be more independent and inclusive. We remain committed to ensuring our directors represent diverse perspectives, skill sets and backgrounds and we have a near-term focus on adding diverse directors to the Board. During 2023, we look forward to working with Mr. Schwartz and the rest of the management team to build on our momentum to create value for the benefit of our stakeholders. On behalf of the Board, we thank you for your commitment to Carlyle. /s/ Lawton W. Fitt LAWTON W. FITT Lead Independent Director April [●], 2023 | |||||
CARLYLE Proxy Statement 2023 | 3 | ||||
Voting Roadmap
BOARD RECOMMENDATION | PAGE | |||||||
ITEM 1. Election to our Board of Directors of four Class III director nominees named in the accompanying Proxy Statement for a three-year term | FOR each director | |||||||
ITEM 2. Ratification of Ernst & Young as Independent Registered Public Accounting Firm for 2023 | FOR | |||||||
ITEM 3. Management Proposal to Reorganize the Board of Directors into One Class | FOR | |||||||
ITEM 4. Approval of The Carlyle Group Inc. Amended and Restated 2012 Equity Incentive Plan | FOR | |||||||
ITEM 5. Non-Binding Vote to Approve Named Executive Officer Compensation (“Say-on-Pay”) | FOR | |||||||
ITEM 6. Shareholder Proposal to Implement a Simple Majority Vote Requirement in Our Governing Documents | FOR | |||||||
4 | CARLYLE Proxy Statement 2023 | ||||
Executive Summary
2022 Financial Highlights
$1.6 Billion | $1.9 Billion | $34.8 Billion | ||||||||||||
In Income Before Provision for Income Taxes, reflecting an income before provision for income taxes margin of 35% | In Distributable Earnings* | In Invested Capital (carry funds), a record level of deployment | ||||||||||||
 |  |  | ||||||||||||
$373 Billion | $29.9 Billion | $1 Billion | ||||||||||||
In Assets Under Management, up 24% year over year | In Fundraising | of Net Realized Performance Revenues* | ||||||||||||
* For a reconciliation of non-GAAP measures to the corresponding GAAP measures, please see Appendix A: Reconciliation of Non-GAAP Measures.
CARLYLE Proxy Statement 2023 | 5 | ||||
Executive Summary
Continued Growth
Delivering results in a volatile market
We delivered strong full year results in 2022 throughout a challenging and dynamic market environment. Our growth in 2022 was driven by the completion of several strategic transactions in combination with fundraising efforts for our large and scaled investment strategies. We generated $1.6 billion in income before provision for taxes in 2022, and saw a 40% increase in Fee Related Earnings (“FRE”) from $598 million in 2021 to $834 million in 2022. Our full-year FRE margin of 36% in 2022 increased from 33% in 2021.
Our total assets under management (“AUM”) grew 24% during the year to $373 billion, and fee-earning assets under management (“FEAUM”) increased 38% to $267 billion, reflecting fundraising of $29.9 billion, appreciation of 11% in our traditional carry funds, as well as the impact on capital formation of the following strategic transactions during the year:
•In March 2022, we acquired the management contracts related to a portfolio of assets primarily comprised of U.S. and European CLOs as well as other assets across private credit from CBAM Partners LLC (“CBAM”), totaling $15 billion in assets under management, which were integrated into our Global Credit platform.
•In April 2022, we entered into a strategic advisory services agreement with certain subsidiaries of Fortitude to provide certain services, including business development and growth, transaction origination and execution, and capital management services. As of December 31, 2022, we had $46 billion of Perpetual Capital associated with the agreement, on which we earn a recurring management fee.
•In August 2022, we acquired Abingworth, a life sciences investment firm, to expand our healthcare investment platform with the addition of nearly $2 billion in assets under management and a specialized team of over 20 investment professionals and advisors.
Our three global business segments continued to drive attractive results for our stakeholders throughout 2022 and we believe are well-positioned to capitalize on what we expect will be an improved investment environment in 2023.
•Our Global Private Equity (“GPE”) segment managed AUM of $163 billion at year-end 2022, and FRE of $541 million in 2022 increased 34% from 2021. Our investment teams again delivered attractive appreciation in 2022, with our Real Estate funds appreciating 16%, Infrastructure & Natural Resource funds appreciating a robust 48%, and Corporate Private Equity funds up 6%. This strong investment performance helped net accrued carry in Global Private Equity increase to $3.5 billion at year end even after more than $900 million of net carry realizations. We invested capital of $19.9 billion and realized proceeds of $22.5 billion in GPE during 2022.
•Our Global Credit segment grew to $146 billion in AUM, an increase of 99% one year ago, driven by both organic capital raising activity as well as the positive impact from the CBAM acquisition and Fortitude transaction. This helped drive FRE to more than double to $225 million. We raised $15 billion in new capital in Global Credit in 2022, and we expect to have an active year fundraising for additional strategies in 2023, which should position Global Credit for further growth. In addition, we remain focused on helping Fortitude evaluate new growth opportunities, from which we would benefit in incremental advisory revenues.
•Global Investment Solutions segment AUM of $63 billion decreased 3% from one year ago as realizations and negative foreign exchange activity more than offset 6% appreciation and fundraising across the platform. Fee Related Earnings of $69 million in 2022 was lower than 2021, but we expect to see growth later in 2023 as we begin raising capital for our flagship co-investment and secondaries strategies. In addition, with $374 million in net accrued carry and strong fund performance, realized net performance related revenues are poised to increase over time. As fund investors’ need for liquidity persists, we are well positioned to capitalize on this trend through our secondaries and co-investments business and expect to find numerous opportunities to invest in 2023 and beyond.
We enter 2023 in a strong capital position with $1.4 billion in cash, $2.4 billion in firm investments, and $4 billion of net accrued carry on our balance sheet—in total over $20 per share. Overall, 2022 was a solid year across most financial metrics for Carlyle, and we are confident that we will build on our momentum to bolster the firm’s position and create value for our investors and shareholders.
6 | CARLYLE Proxy Statement 2023 | ||||
Executive Summary
ESG and DEI Highlights
Our focus on building the firm includes investment and leadership in Environmental, Social and Governance (“ESG”) capabilities and Diversity, Equity and Inclusion (“DEI”), which are increasingly required to drive returns and meet the demands of our fund investors and shareholders. ESG and DEI are embedded in everything we do—it is not a single product or strategy, but a mindset that permeates our culture and investment ethos. We believe that creating value for investors requires diverse and inclusive teams that examine ideas from every angle and make better decisions, and we are committed to work to incorporate ESG and DEI into everything we do. In 2022, we made measurable progress in advancing ESG and DEI across our firm, our investments, and our community, including:
more than | ||||||||||||||
| 250 | $24 Trillion | $23 Billion | ||||||||||||
GPs and LPs have signed on to participate in the ESG Data Convergence Initiative | in AUM represented by the ESG Data Convergence Initiative participants | in ESG linked financings across our funds and portfolio companies in 2022 | ||||||||||||
| more than |  |  | ||||||||||||
| 300 | ||||||||||||||
portfolio company board seats have been filled with diverse directors since January 1, 2020 | ||||||||||||||
Five | Launched the DEI Leadership network, a coalition of CEOs within our portfolio, to share DEI best practices, learn from one another’s experiences, and provide tools and strategies to lead with DEI at the forefront | |||||||||||||
years straight of carbon neutrality as a firm | ||||||||||||||
1Representation data as of January 1, 2023. Hire data from January 1 through December 31, 2022.
2Ethnically diverse definition: Asian, Black, Hispanic or Latinx, Native Hawaiian / Pacific Islander, American Indian / Alaskan Native, Two or More Races.
3Carlyle-controlled companies acquired since 2016 as of December 31, 2022 compared to Year 1 ESG Data Convergence Initiative data report released November 4, 2022.
CARLYLE Proxy Statement 2023 | 7 | ||||
Executive Summary
Looking Ahead in Advancing ESG and DEI
Environmental, Social and Governance
We are committed to the principle that building a better business means investing responsibly and engaging in the communities where we work and invest. As a responsible global organization dedicated to driving value by seeking to serve its stakeholders, Carlyle has made it a priority to invest in a framework and the necessary resources for understanding, monitoring and managing ESG risks and opportunities across our portfolio. We believe ESG provides an additional lens to help us assess and mitigate risks, and identify and capitalize on potential opportunities.
We continue to improve and accelerate our core ESG integration through better measurement and tracking of ESG performance across our investments. The growing momentum and investor interest in our ESG Data Convergence Initiative has led us to consider expanding this venture into other asset classes, such as credit; determine how we can best include other key stakeholders, such as consultants and advisors; and incorporate additional key performance indicators in our next round of reporting, including metrics on climate, employees, or material ESG factors by sector.
In line with our publicly-stated climate goals, we will also continue to partner with portfolio companies to help them set and achieve Paris-aligned climate targets where relevant.
Diversity, Equity and Inclusion
We are taking action to advance DEI across our spheres of influence because we know that leveraging the unique perspectives and backgrounds of talented people helps us make better decisions, and in turn, deliver better results. Evidence from our portfolio makes this clear. As we ignite action at Carlyle—both in our investments and the broader business community—we are making near-term progress and laying the foundation for even greater impact in the future.
As DEI continues to be a vital component of successful organizations, we are committed to delivering on the value creation, innovation, and competitive advantage that diversity brings. We are proud of our progress and remain committed to the work ahead. We will further empower our people, our portfolio companies, and the broader community to advance DEI and drive performance.
8 | CARLYLE Proxy Statement 2023 | ||||
Executive Summary
Corporate Governance Highlights
On February 6, 2023, we announced the appointment of Harvey M. Schwartz as our Chief Executive Officer and a member of our Board of Directors, effective February 15, 2023. In addition, during the previous two years, we appointed three new independent directors to the Board, Linda H. Filler and Mark S. Ordan in 2022 and Derica W. Rice in 2021. This increase in the number of independent directors on our Board reflects Carlyle’s continuing commitment to enhancing our corporate governance.
Active Board Refreshment
In seeking new members of the Board of Directors, we focus on experience and demonstrated success in areas relevant to Carlyle’s business and strategy, diverse perspectives and anticipated contribution to the Board’s effective oversight of our leadership team.
Carlyle has adopted policies and practices that are designed to ensure compliance with the rules and regulations of the U.S. Securities and Exchange Commission, the listing requirements of The Nasdaq Global Select Market, and applicable corporate governance requirements.
Key corporate governance practices include:
•Our Board advises management and provides oversight of the firm’s business and affairs
•Our Board is diverse in terms of gender, ethnicity, experience, perspective and skills
•The Board has a strong Lead Independent Director, Lawton Fitt, who works closely with the independent directors to provide objective oversight of our business and facilitates communication with the Board, the identification of matters for consideration by the Board and management, and the formulation of appropriate guidance to be provided by the independent directors to our leadership team
•The independent members of the Board meet in executive session regularly without the presence of management. The Board’s Lead Independent Director presided over these executive sessions in 2022
•The Nominating and Corporate Governance Committee leads the annual Board, Committee and director assessments
•While our Board currently is classified, we intend to introduce a management proposal at this year’s Annual Meeting to reorganize the Board into one class
•Our executive officers and heads of business segments are subject to an Incentive Compensation Clawback Policy
•Our directors and executive officers are required to hold shares of our common stock with a minimum value determined based on their respective position
•We prohibit short sales and derivative transactions in our equity and hedging our stock, and generally prohibit pledging our stock
•The full Board focuses on succession planning
•On an ongoing basis, the Board, led by the Nominating and Corporate Governance Committee, considers the composition of the Board as a whole, and seeks to identify potential directors who have the necessary skills, experience and personal attributes to advise management and effectively oversee the Company
•The Board receives regular updates on our ESG strategy, including our approach to climate risk and opportunity and DEI
•The Nominating and Corporate Governance Committee, which takes a leadership role in shaping our corporate governance, including our ESG and Impact strategy, has appointed Linda H. Filler as the Board’s ESG and Impact lead, responsible for oversight of the firm’s work in this area
CARLYLE Proxy Statement 2023 | 9 | ||||
Executive Summary
Compensation Highlights
Below is a snapshot of the compensation awarded to our named executive officers during 2022 (or in respect of their services for 2022). Our philosophy is to pay for performance and link a substantial portion of compensation to the achievement of financial and other metrics that drive the overall performance of the company.
2022 EXECUTIVE COMPENSATION OVERVIEW
| Form | Compensation Element | Description | |||||||||
 | BASE SALARY | Fixed salary paid bi-weekly | |||||||||
ANNUAL CASH PERFORMANCE AWARDS | Bonus paid to certain of our named executive officers based on assessment of overall firm, investment fund and individual performance | ||||||||||
 | TIME-VESTING RESTRICTED STOCK UNITS | RSUs awarded to certain of our named executive officers that are eligible to vest over 3.5 years | |||||||||
PERFORMANCE-VESTING RESTRICTED STOCK UNITS | Performance-vesting RSU awards to certain of our named executive officers that vest based on achievement of one or more of the following financial performance metrics: •FRE •Net Realized Performance Revenues (“NRPR”) •Fee-Earning Assets Under Management Raised (“FEAUM Raised”) Payout for these awards capped at 150% if certain stock price conditions are not satisfied | ||||||||||
COMPENSATION PRACTICES
WHAT WE DO: | WHAT WE DO NOT DO: | ||||||||||||||||
 Align pay with firmwide performance, including through use of time-vesting and performance-vesting RSUs Large majority of compensation is variable, and the majority is delivered in equity Long-term incentive awards are denominated and settled in equity Prohibit short sales and derivative transactions in our equity and hedging of our stock and generally prohibit pledging of our stock Regularly engage with current and potential shareholders Engage an independent compensation consultant that works directly for our Compensation Committee and does no work for management Tie incentive compensation to a clawback policy that covers financial restatements Require our executive officers to own a minimum value of shares of our common stock and retain a portion of certain RSU awards for a fixed minimum period following vesting Hold an annual Say-on-Pay vote Perform an annual compensation risk assessment Require achievement of rigorous stock price targets for our new CEO’s stock price and TSR-based RSU award, and require performance at the 60th percentile of relative TSR in order to receive the target payout for 40% of such award (and provide for forfeiture of such portions of such award for performance below the 50th percentile) For new equity incentive awards granted since 2022, require a qualifying termination of employment following a change in control of Carlyle in order for any such change in control to trigger accelerated vesting rights |  No excise tax “gross-up” payments in the event of a change in control No tax “gross-up” payment in perquisites for named executive officers No dividends paid in cash on unvested equity awards | ||||||||||||||||
10 | CARLYLE Proxy Statement 2023 | ||||
Item 1. Election of Class III Directors
Our Board is comprised of twelve directors. A majority our directors are independent, and five are employees or consultants of the firm in addition to serving as directors. Our independent directors are comprised of a diverse group of highly educated professionals with experience in different industries that helps to inform our global investment management business, including banking and finance, healthcare, pharma, real estate, hospitality, consumer products, telecommunications, marketing and education. The directors who are not independent have extensive experience and strong reputations within the global investment management industry.
Our certificate of incorporation provides for a classified board of directors consisting of three classes of directors, each serving staggered three-year terms. Upon expiration of the term of a class of directors, directors for that class will be elected for three-year terms at the annual meeting of shareholders in the year in which that term expires. Each director’s term continues until the election and qualification of his or her successor or his or her earlier death, resignation or removal. Any increase or decrease in the number of directors will be distributed among the three classes so that, as nearly as possible, each class will consist of one-third of the directors. While our Board currently is classified, we intend to introduce a management proposal at this year’s Annual Meeting to reorganize the Board into one class. See “Item 3. Management Proposal to Reorganize the Board of Directors into One Class” for additional information.
In connection with our conversion from a Delaware limited partnership into a Delaware corporation (the “Conversion”), we entered into stockholder agreements with our founders. These agreements grant each of our founders the right to designate nominees to our Board of Directors subject to the maintenance of certain ownership requirements. See “Certain Relationships and Related Transactions–Stockholder Agreements” for additional information.
The Board has selected William E. Conway, Jr., Lawton W. Fitt, Mark S. Ordan and Anthony Welters for election as Class III directors. If elected, each Class III director will serve until the annual meeting of shareholders in 2026, and thereafter until their successors are duly elected and qualified, or until such director’s earlier death, resignation or removal.
BOARD RECOMMENDATION
After a review of the individual qualifications and experiences of each of our director nominees and their contributions to our Board, our Board determined unanimously to recommend that shareholders vote “FOR” the four Class III nominees named in this Proxy Statement. | ||
CARLYLE Proxy Statement 2023 | 11 | ||||
Corporate Governance
Director Nominees and Continuing Directors
CONTINUING CLASS III DIRECTORS WHOSE TERMS WILL EXPIRE IN 2023
 | WILLIAM E. CONWAY, JR., Co-Founder and Co-Chairman of the Board | |||||||
Age: Director Since: Committees: | 73 2011 None | |||||||
Mr. Conway is a Co-Founder and Co-Chairman of the Board. Mr. Conway was elected to our Board of Directors effective July 18, 2011. Previously, Mr. Conway served as our Interim Chief Executive Officer, Co-Chief Executive Officer and Chief Investment Officer. Prior to forming Carlyle in 1987, Mr. Conway was the Senior Vice President and Chief Financial Officer of MCI Communications Corporation (“MCI”). Mr. Conway was a Vice President and Treasurer of MCI from 1981 to 1984. Mr. Conway is former Chairman of the Board of Trustees of Johns Hopkins Medicine and a member of the Board of Trustees of the Catholic University of America. He previously served as chairman and/or director of several public and private companies in which Carlyle had significant investment interests. Mr. Conway received his BA from Dartmouth College and his MBA in finance from The University of Chicago Booth School of Business. Qualifications Mr. Conway is a co-founder of our firm and has played an integral role in our firm’s successful growth since its founding in 1987. He also has developed a unique and unparalleled understanding of our business. Skills and Experience Accounting and Finance; Financial Services; Global Perspective; Senior Executive and Corporate Governance | ||||||||
| LAWTON W. FITT, Lead Independent Director | |||||||
Age: Director Since: Committees: | 69 2012 Audit Committee; Compensation Committee; Nominating and Corporate Governance Committee (Chair) | |||||||
Ms. Fitt is a member of our Board of Directors, and serves as our Lead Independent Director. Ms. Fitt was elected to our Board of Directors effective May 2, 2012. Ms. Fitt is the Chairperson of the Nominating and Corporate Governance Committee, and a member of the Audit and Compensation Committees. Ms. Fitt served as Secretary (CEO) of the Royal Academy of Arts in London from October 2002 to March 2005. Prior to that, Ms. Fitt was a partner with Goldman Sachs & Co. Ms. Fitt is currently a director of Ciena Corporation (where she serves as chair of the Audit Committee) and The Progressive Corporation (where she serves as Chairperson, and serves on the Investment and Capital Committee and as chair of the Nominating and Governance Committee). Ms. Fitt is a former director of Micro Focus International, ARM Holdings PLC, and Thomson Reuters. She is also a trustee or director of several not-for-profit organizations including the Goldman Sachs Foundation. Ms. Fitt earned her AB in history at Brown University and her MBA from the Darden School of the University of Virginia. Qualifications Ms. Fitt has an extensive financial background and experience in a distinguished career at Goldman Sachs in the areas of investment banking and risk analysis, including her unique insights into the operation of global capital markets. Skills and Experience Accounting and Finance; Financial Services; Global Perspective; Risk Management and Compliance; Senior Executive and Corporate Governance | ||||||||
12 | CARLYLE Proxy Statement 2023 | ||||
Corporate Governance
 | MARK S. ORDAN, Director | |||||||
Age: Director Since: Committees: | 64 2022 Compensation Committee | |||||||
Mr. Ordan is a member of our Board of Directors. Mr. Ordan was elected to our Board of Directors effective April 1, 2022, and is a member of the Compensation Committee. Mr. Ordan was appointed as Executive Chair of Pediatrix Medical Group in January 2023 and formerly served as its Chief Executive Officer from July 2020 through December 2022. Prior to joining Pediatrix Medical Group, Mr. Ordan founded and served as Chief Executive Officer of Quality Care Properties after serving as founding Chief Executive Officer of Washington Prime Group. Mr. Ordan has held a number of CEO roles including at Sunrise Senior Living, The Mills Corporation, Balducci’s, and was founder and CEO of Fresh Fields Markets, which he later merged with Whole Foods Markets. Mr. Ordan is the Executive Chair of Pediatrix Medical Group, the Board Chair of the U.S. Chamber of Commerce, and is a board member of The Carlyle Group. Mr. Ordan received his BA from Vassar College, and his MBA from Harvard Business School. He serves on the boards of Vassar College and Holton-Arms School. Qualifications Mr. Ordan has extensive leadership experience from serving as the CEO of various companies and resulting in considerable operational knowledge, as well as his prior experience as a director of other public company boards. Skills and Experience Branding and Marketing; Government, Public Policy, and Regulatory Affairs; Senior Executive and Corporate Governance; Succession Planning and Human Capital Management | ||||||||
 | ANTHONY WELTERS, Director | |||||||
Age: Director Since: Committees: | 68 2015 Compensation Committee (Chair); Nominating and Corporate Governance Committee | |||||||
Mr. Welters is a member of our Board of Directors. Mr. Welters was elected to our Board of Directors effective October 27, 2015, and is the Chairperson of the Compensation Committee, as well as a member of the Nominating and Corporate Governance Committee. He is Founder, Chairman and CEO of CINQ Care Inc., a physician-led, community-based ambulatory care delivery system that delivers whole person care in the home, whenever possible, to Black and Brown communities. He is Executive Chairman of the BlackIvy Group, an organization focused on building and growing commercial enterprises in Sub-Saharan Africa, and Chairman of Somatus, Inc., a value-based kidney care company. Mr. Welters founded AmeriChoice in 1989 and upon acquisition by UnitedHealth Group (UHG) in 2002, joined UHG serving as Senior Adviser to the Office of the CEO, Executive Vice President and Member of the Office of the CEO, retiring in 2016. He currently serves on the public boards of Loews Corporation and Gilead Sciences, Inc. Mr. Welters is Trustee Emeritus of Morehouse School of Medicine Board of Trustees, Chairman Emeritus of the Board of New York University School of Law, Vice Chairman of the Board of New York University, a Trustee of NYU Langone Medical Center, Vice Chair of the John F. Kennedy Center for the Performing Arts and a founding member of the National Museum of African American History and Culture. Qualifications Mr. Welters has extensive entrepreneurial and operating expertise, as well as a familiarity with board responsibilities, oversight and control resulting from his significant experience serving on the boards of directors of various public companies. Skills and Experience Global Perspective; Senior Executive and Corporate Governance; Succession Planning and Human Capital Management | ||||||||
CARLYLE Proxy Statement 2023 | 13 | ||||
Corporate Governance
CONTINUING CLASS I DIRECTORS WHOSE TERMS WILL EXPIRE IN 2024
 | DANIEL A. D’ANIELLO, Co-Founder and Chairman Emeritus | |||||||
Age: Director Since: Committees: | 76 2011 None | |||||||
Mr. D’Aniello is a Co-Founder and Chairman Emeritus of Carlyle. He has served on our Board of Directors since the Board’s inception on July 18, 2011, serving as Chairman from 2012 until January 1, 2018. Prior to forming Carlyle in 1987, Mr. D’Aniello was the Vice President for Finance and Development at Marriott Corporation for eight years. Before joining Marriott, Mr. D’Aniello was a financial officer at PepsiCo, Inc. and Trans World Airlines. Mr. D'Aniello served in the United States Navy from 1968 through 1971 during which time he was a Distinguished Naval Graduate of Officer Candidate School, Newport R.I.; a Supply Officer (LTJG) aboard the USS Wasp (CVS 18); and in 2016, Mr. D'Aniello was awarded the designation of Lone Sailor by the U.S. Navy Memorial Foundation. Mr. D’Aniello is Chairman of the American Enterprise Institute for Public Research; Co-Chairman of the Institute for Veterans and Military Families; Chairman of the Wolf Trap Foundation of the Performing Arts; an Advisor to the John Templeton Foundation; a founding Trustee of the Lumen Institute; and a Lifetime Member of the Board of Trustees of Syracuse University, a member of the Chancellor’s Council and the Corporate Advisory Council to the Martin J. Whitman School of Management. Mr. D’Aniello previously served as chairman and/or director of several private and public companies in which Carlyle had significant investment interests. Mr. D’Aniello is a 1968 magna cum laude graduate of Syracuse University, where he was a member of Beta Gamma Sigma, and a 1974 graduate of the Harvard Business School, where he was a Teagle Foundation Fellow. Qualifications Mr. D’Aniello is a co-founder of our firm and has played an integral role in our firm’s successful growth since its founding in 1987. He also has developed a unique and unparalleled understanding of our business. Skills and Experience Accounting and Finance; Financial Services; Global Perspective; Senior Executive and Corporate Governance | ||||||||
14 | CARLYLE Proxy Statement 2023 | ||||
Corporate Governance
 | DR. THOMAS S. ROBERTSON, Director | |||||||
Age: Director Since: Committees: | 80 2012 Audit Committee | |||||||
Dr. Robertson is a member of our Board of Directors. Dr. Robertson was elected to our Board of Directors effective May 2, 2012, and is a member of the Audit Committee. Dr. Robertson was the Dean of The Wharton School from 2007 to 2014. Since then, he has been the Joshua J. Harris Professor of Marketing at The Wharton School where he holds the positions of Academic Director of the Baker Retailing Center and Executive Director of the Wharton INSEAD Alliance. Previously, Dr. Robertson was Dean of Emory University’s Goizueta Business School from 1998 to 2007. He also served as Special Assistant to Emory University’s president on issues of international strategy and was a founding director of the Institute for Developing Nations, which was established jointly by Emory University and The Carter Center in fall 2006. Before joining Emory, Dr. Robertson was the Sainsbury Professor and Chair of the Marketing Department and Deputy Dean of the London Business School from 1994 to 1998. He also served as a member of the Marketing faculty at The Wharton School from 1971 to 1994 and was the Associate Dean for Executive Education. Dr. Robertson has been on the Advisory Board of The Sorbonne Universities and is a former director of CRA International, Inc. and PRGX Global, Inc. He graduated from Wayne State University and received his M.A. in Sociology and Ph.D. in Marketing from Northwestern University. Qualifications Dr. Roberston has a distinguished career as a professor and Dean of the Wharton School at the University of Pennsylvania and extensive knowledge and expertise in finance and business administration. Skills and Experience Branding and Marketing; Global Perspective; Senior Executive and Corporate Governance; Sustainability | ||||||||
 | WILLIAM J. SHAW, Director | |||||||
Age: Director Since: Committees: | 77 2012 Audit Committee (Chair) | |||||||
Mr. Shaw is a member of our Board of Directors. Mr. Shaw was elected to our Board of Directors effective May 2, 2012 and is the Chairperson of the Audit Committee. Mr. Shaw was the Vice Chairman of Marriott International, Inc. until his retirement in March 2011. Prior to becoming Vice Chairman of Marriott, Mr. Shaw served as President and Chief Operating Officer of Marriott from 1997 until 2009. Mr. Shaw joined Marriott in 1974 and held various positions, including Corporate Controller, Corporate Vice President, Senior Vice President-Finance, Treasurer, Chief Financial Officer, Executive Vice President and President of Marriott Service Group. Prior to joining Marriott, Mr. Shaw worked at Arthur Andersen & Co. Mr. Shaw is Chairman of the Board of Directors of Marriott Vacations Worldwide Corporation, a Director of DiamondRock Hospitality (where he serves as Chairman of the Audit Committee and serves on the Compensation Committee and Nominating and Corporate Governance Committee) and is a former member of the Board of Trustees of three funds in the American Family of mutual funds from 2009 to 2015. Mr. Shaw serves on the Board of Trustees of the University of Notre Dame. Mr. Shaw graduated from the University of Notre Dame and received an MBA from Washington University in St. Louis. Qualifications Mr. Shaw has an extensive financial background and public company operating and management experience resulting from his distinguished career in various senior leaderships roles at Marriott. Skills and Experience Accounting and Finance; Global Perspective; Risk Management and Compliance; Senior Executive and Corporate Governance; Succession Planning and Human Capital Management; Technology and/or Cybersecurity | ||||||||
CARLYLE Proxy Statement 2023 | 15 | ||||
Corporate Governance
NOMINEES FOR CLASS II DIRECTORS WHOSE TERMS WILL EXPIRE IN 2025
 | DAVID M. RUBENSTEIN, Co-Founder and Co-Chairman of the Board | |||||||
Age: Director Since: Committees: | 73 2011 None | |||||||
Mr. Rubenstein is Co-Founder and Co-Chairman of the Board. He was elected to our Board of Directors effective July 18, 2011. Previously, Mr. Rubenstein served as Co-Chief Executive Officer of Carlyle. Prior to forming Carlyle in 1987, Mr. Rubenstein practiced law in Washington, D.C. with Shaw, Pittman, Potts & Trowbridge LLP (now Pillsbury Winthrop Shaw Pittman LLP). From 1977 to 1981, Mr. Rubenstein was Deputy Assistant to the President for Domestic Policy. From 1975 to 1976, he served as Chief Counsel to the U.S. Senate Judiciary Committee’s Subcommittee on Constitutional Amendments. From 1973 to 1975, Mr. Rubenstein practiced law in New York with Paul, Weiss, Rifkind, Wharton & Garrison LLP. Among other philanthropic endeavors, Mr. Rubenstein is Chairman of the Boards of the John F. Kennedy Center for the Performing Arts, the Council on Foreign Relations, the National Gallery of Art, the Economic Club of Washington, and the University of Chicago and serves on the Boards of Memorial Sloan-Kettering Cancer Center, Johns Hopkins Medicine, the Institute for Advanced Study, the National Constitution Center, the Brookings Institution, the Lincoln Center for the Performing Arts, the American Academy of Arts and Sciences, and the World Economic Forum. Mr. Rubenstein serves as a Fellow of the Harvard Corporation and as Chairman of the Harvard Global Advisory Council and the Madison Council of the Library of Congress. He is a member of the American Philosophical Society, Business Council, Board of Dean’s Advisors of the Business School at Harvard, Advisory Board of the School of Economics and Management at Tsinghua University, and Board of the World Economic Forum Global Shapers Community. Mr. Rubenstein is a magna cum laude graduate of Duke University, where he was elected Phi Beta Kappa. Following Duke, Mr. Rubenstein graduated from the University of Chicago Law School, where he was an editor of the Law Review. Qualifications Mr. Rubenstein is a co-founder of our firm and has played an integral role in our firm’s successful growth since its founding in 1987. He also has developed a unique and unparalleled understanding of our business. Skills and Experience Financial Services; Government, Public Policy, and Regulatory Affairs; Global Perspective; Senior Executive and Corporate Governance | ||||||||
16 | CARLYLE Proxy Statement 2023 | ||||
Corporate Governance
 | HARVEY M. SCHWARTZ, Chief Executive Officer and Director | |||||||
Age: Director Since: Committees: | 58 2023 None | |||||||
Harvey M. Schwartz is the Chief Executive Officer of Carlyle and member of the Board of Directors effective February 15, 2023. He is based in New York. He is the former President and Co-Chief Operating Officer of The Goldman Sachs Group, Inc. Mr. Schwartz joined Goldman Sachs in 1997 and subsequently held numerous senior leadership positions including Chief Financial Officer, Global Co-Head of the Securities Division, Head of Securities Division Sales, Head of North American Sales and Co-Head of the Americas Financing Group. He additionally served as a member of the firm’s Management Committee and co-headed its Risk Committee, Steering Committee on Regulatory Reform, Capital Committee and Finance Committee. Mr. Schwartz established the firm’s Investment Policy Committee on which he also served as a member. Prior to Goldman Sachs, Mr. Schwartz spent a decade working at several financial firms, including Citicorp, from 1990 through 1997. As both an investor and advisor, he is currently involved in a range of investment and philanthropic endeavors. These efforts include a focus on mental health and developing future business leaders, including women and young people seeking a career in finance. He serves as the Group Chairperson and Non-Executive Director of The Bank of London, a clearing and payments bank with operations in London and New York City. In addition, Mr. Schwartz serves on the board of SoFi Technologies, Inc., a San Francisco-based fintech company, and One Mind, a nonprofit that accelerates collaborative research and advocacy to enable all individuals facing brain health challenges to build healthy, productive lives. Mr. Schwartz earned his BA from Rutgers University, where he is a member of the university’s Board of Governors and its Hall of Distinguished Alumni. He received his MBA from Columbia University. Qualifications Mr. Schwartz is a widely respected business builder with extensive leadership experience in a high performing, complex global financial institution. He is also a seasoned operator and has a demonstrated ability to develop high performing talent. Skills and Experience Accounting and Finance; Branding and Marketing; Financial Services; Global Perspective; Government, Public Policy, and Regulatory Affairs; Risk Management and Compliance; Senior Executive and Corporate Governance; Succession Planning and Human Capital Management; Technology and/or Cybersecurity | ||||||||
 | LINDA H. FILLER, Director | |||||||
Age: Director Since: Committees: | 63 2022 Nominating and Corporate Governance Committee | |||||||
Ms. Filler is a member of our Board of Directors. Ms. Filler was elected to our Board of Directors effective April 1, 2022, and is a member of the Nominating and Corporate Governance Committee and serves as the Board’s ESG and Impact lead. Ms. Filler retired as President of Retail Products, Chief Marketing Officer, and Chief Merchandising Officer at Walgreen Co in 2017. Prior to Walgreen Co, Ms. Filler served in Executive Vice President roles at Walmart and at Kraft Foods. Prior to Kraft, Ms. Filler served a long tenure at Hanes Brands, including Group CEO roles of its largest branded apparel businesses. Ms. Filler is Lead Independent Director at Danaher Corporation, where she has served as a Director since 2004. She serves as Chair of the Nominating & Governance Committee and on the Science & Technology Committee. Ms. Filler also serves on the Board of Eversight, a leader in AI-based price and promotion optimization for consumer goods companies and retailers. Ms. Filler serves as Chair of the Development Committee for the Chicago Public Library Foundation, and on the Foundation’s Executive Committee, among other philanthropic activities. Ms. Filler earned an MBA from Harvard Business School and an MS from the University of North Texas. Qualifications Ms. Filler has extensive experience in senior management roles and expertise in marketing and branding and corporate strategy, as well as her experience as a director of a large, global business. Skills and Experience Accounting and Finance; Branding and Marketing; Global Perspective; Senior Executive and Corporate Governance; Succession Planning and Human Capital Management; Sustainability | ||||||||
CARLYLE Proxy Statement 2023 | 17 | ||||
Corporate Governance
 | JAMES H. HANCE, JR., Operating Executive and Director | |||||||
Age: Director Since: Committees: | 78 2012 None | |||||||
Mr. Hance is an Operating Executive of Carlyle and a member of our Board of Directors. Mr. Hance was elected to our Board of Directors effective May 2, 2012. Mr. Hance joined Carlyle in November 2005 as an Operating Executive and has worked primarily in our Global Credit segment and the financial services sector. Prior to joining Carlyle in 2005, Mr. Hance served as Vice Chairman of Bank of America from 1993 until his retirement on January 31, 2005 and served as Chief Financial Officer from 1988 to 2004. Prior to joining Bank of America, Mr. Hance spent 17 years with Price Waterhouse (now Pricewaterhouse Coopers LLP). Mr. Hance is currently a director of Acuity Brands Inc. (where he serves as the Lead Independent Director and on the Audit Committee and Governance Committee). Mr. Hance is a former director of Ford Motor Company, Sprint Nextel Corporation, Morgan Stanley, Duke Energy Corporation, Cousins Properties, Parkway, Inc. and Bank of America Corporation. Mr. Hance serves as Emeritus Trustee on the Board of Trustees at Washington University in St. Louis and as Chairman of the Board of Trustees at Johnson & Wales University in Providence, RI. Mr. Hance graduated from Westminster College and received an MBA from Washington University in St. Louis. He is a certified public accountant. Qualifications Mr. Hance has an invaluable perspective owing to his experience in various senior leadership roles in the financial services industry, including his role as the Chief Financial Officer of Bank of America Corporation, which included responsibility for financial and accounting matters, as well as his familiarity with our business and operations as an Operating Executive of Carlyle. Skills and Experience Accounting and Finance; Financial Services; Global Perspective; Risk Management and Compliance; Senior Executive and Corporate Governance; Technology and/or Cybersecurity | ||||||||
 | DERICA W. RICE, Director | |||||||
Age: Director Since: Committees: | 58 2021 Audit Committee; Compensation Committee | |||||||
Mr. Rice is a member of our Board of Directors. Mr. Rice was appointed to our Board of Directors effective March 8, 2021, and is a member of the Audit and Compensation Committees. Mr. Rice served as executive vice president of CVS Health and President of CVS Caremark, the pharmacy benefits management business of CVS Health, from March 2018 to February 2020. Previously, he held various executive positions at Eli Lilly and Company, most recently executive vice president of Global Services and chief financial officer from 2006 to 2017. Mr. Rice is currently a director of Bristol-Meyers Squibb Company (where he serves on the Audit Committee and the Compensation and Management Development Committee), Target Corporation (where he serves on the Audit and Finance Committee and the Infrastructure and Investment Committee) and The Walt Disney Company (where he serves on the Audit Committee). Mr. Rice received his Bachelor of Science degree in Electrical and Electronics Engineering from Kettering University and an MBA from Indiana University. Qualifications Mr. Rice has experience with complex, global business operations, and extensive knowledge of a wide range of financial and accounting matters resulting from his distinguished career at CVS Health and Eli Lilly and Company. Skills and Experience Accounting and Finance; Branding and Marketing; Global Perspective; Government, Public Policy, and Regulatory Affairs; Risk Management and Compliance; Senior Executive and Corporate Governance; Succession Planning and Human Capital Management; Sustainability | ||||||||
18 | CARLYLE Proxy Statement 2023 | ||||
Corporate Governance
Board Composition
BOARD NOMINATION PROCESS
The Nominating and Corporate Governance Committee considers director candidates recommended by the Company’s shareholders, directors, officers and employees and third-party search firms and other sources it deems appropriate. The Nominating and Corporate Governance Committee may engage consultants or third-party search firms to assist in identifying and evaluating potential candidates. In this respect, Mr. Ordan was recommended by other members of the Board. All candidates are reviewed in the same manner, regardless of the source of the recommendation. Any recommendation submitted to the Secretary of the Company should be in writing and should include any supporting material the shareholder considers appropriate in support of that recommendation, but must include information that would be required under the rules of the SEC to be included in a proxy statement soliciting proxies for the election of such candidate and a written consent of the candidate to serve as one of our directors if elected. Shareholders wishing to propose a candidate for consideration may do so by submitting the above information to the attention of the Corporate Secretary, The Carlyle Group, 1001 Pennsylvania Avenue, NW, Washington, DC 20004. All recommendations for nomination received by the Secretary that satisfy the notification, timeliness, consent, information and other requirements set forth in our certificate of incorporation requirements relating to director nominations will be presented to the Nominating and Corporate Governance Committee for its consideration. See “Frequently Asked Questions – How can I submit nominees or shareholder proposals in accordance with our certificate of incorporation?” for additional information.
DIRECTOR QUALIFICATIONS
The Nominating and Corporate Governance Committee is responsible for reviewing the qualifications of potential director candidates and recommending to the Board of Directors those candidates to be nominated for election to the Board. When considering director candidates, the Nominating and Corporate Governance Committee seeks individuals with backgrounds and qualities that, when combined with those of the Company’s incumbent directors, provide a blend of skills and experience to further enhance the effectiveness of the Board of Directors. More specifically, the Nominating and Corporate Governance Committee considers:
•minimum individual qualifications, including strength of character, mature judgment, familiarity with the company’s business and industry, independence of thought and an ability to work collegially; and
•all other factors it considers appropriate, which may include age, diversity of background, existing commitments to other businesses, potential conflicts of interest with other pursuits, legal considerations, corporate governance background, financial and accounting background, executive compensation background, relevant career experience and the size, composition and combined expertise of the existing Board of Directors.
The Board of Directors monitors the mix of specific experience, qualifications and skills of its directors in order to assure that the Board of Directors, as a whole, has the necessary tools to perform its oversight function effectively in light of the Company’s business and structure. Although we have no formal policy regarding board diversity, the Board of Directors believes that diversity is an important component of a board, which includes such factors as background, skills, experience, expertise, gender, race and culture. Moreover, the Board of Directors does not discriminate on the basis of race, color, national origin, gender, religion, disability or sexual preference in selecting director candidates.
In this respect, the Board of Directors is committed to increasing the diversity mix of our directors. As discussed in “Corporate Governance Highlights” above, the Board has undergone an active refreshment the past three years, resulting in three new independent directors during that time: Linda H. Filler and Mark S. Ordan in 2022 and Derica W. Rice in 2021. The Board, along with the Nominating and Corporate Governance Committee, remains committed to refreshing our Board with a particular emphasis on recruiting diverse directors, including gender diverse directors, with a near-term goal of achieving a Board composition of at least 30% gender diverse directors. The Nominating and Corporate Governance Committee is actively interviewing new director candidates, including gender diverse candidates, and intends to appoint new members of the Board before the 2024 Annual Meeting of Shareholders.
CARLYLE Proxy Statement 2023 | 19 | ||||
Corporate Governance
BOARD DIVERSITY MATRIX
The Board of Directors does not discriminate on the basis of race, color, national origin, gender, religion, disability or sexual preference in selecting director candidates. Among our current directors, Ms. Filler and Ms. Fitt identify as female and white, Mssrs. Rice and Welters identify as male and African American or Black, and Mssrs. Conway, D’Aniello, Rubenstein, Schwartz, Hance, Ordan, Robertson and Shaw identify as male and white.
Board Diversity Matrix (As of April [●], 2023) | |||||||||||
| Total Number of Directors | 12 | ||||||||||
| Gender Identity | Female | Male | |||||||||
| Directors | 2 | 10 | |||||||||
| Demographic Background | |||||||||||
| African American or Black | — | 2 | |||||||||
| White | 2 | 8 | |||||||||
BOARD SKILLS AND EXPERIENCE MATRIX
When determining that each of our directors is particularly well-suited to serve on our Board of Directors and that each has the experience, qualifications, attributes and skills, taken as a whole, to enable our Board of Directors to satisfy its oversight responsibilities effectively, we considered the following experience and qualifications of each director.
| Key Attributes of All Directors | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commitment to advancing ESG and DEI | Proven track record of success | Leadership and expertise in their respective fields | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Integrity and business judgment | Dedication to excellence | Strategic thinking | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Diversity of Skills and Experiences | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting and Finance. Directors bring expertise in financial reporting, audit knowledge and experience in capital markets. | 8 Directors | Branding and Marketing. Directors bring expertise in brand development, marketing and sales at a global scale and in local markets relevant to Carlyle’s business. | 5 Directors | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial Services. Directors possess in-depth knowledge of the financial services industry or private equity. | 6 Directors | Global Perspective. Directors provide valuable insights on how Carlyle should continue to grow and manage its businesses outside the United States. | 11 Directors | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Government, Public Policy, and Regulatory Affairs. Directors possess insight and experience in managing governmental and regulatory affairs. | 4 Directors | Risk Management and Compliance. Directors possess in-depth knowledge and experience with risk management and compliance matters relevant to Carlyle’s global business. | 5 Directors | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Senior Executive and Corporate Governance. Directors bring valuable insight and senior executive experience on matters relating to corporate governance, management, operations and compensation. | All Directors | Succession Planning and Human Capital Management. Directors bring expertise in ensuring Carlyle has sufficient talent, robust development and retention practices and supporting our commitment to further DEI. | 6 Directors | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Sustainability. Directors bring experience in the areas of environmental impact, corporate responsibility or sustainability strategies. | 3 Directors | Technology and/or Cybersecurity. Directors possess experience in the development and adoption of new technology or the management of information security or cybersecurity risks at companies. | 3 Directors | |||||||||||||||||||||||||||||||||||||||||||||||||||||
20 | CARLYLE Proxy Statement 2023 | ||||
Corporate Governance
DIRECTOR INDEPENDENCE
Our Board of Directors has affirmatively determined that seven of our directors satisfy the independence requirements of Nasdaq, the SEC and our Governance Policy, including with respect to applicable committee membership. These directors are Ms. Filler, Ms. Fitt, Mr. Ordan, Mr. Rice, Dr. Robertson, Mr. Shaw and Mr. Welters. Based on all the relevant facts and circumstances, the Board of Directors determined that the independent directors have no relationship with us that would impair their independence as it is defined in the Nasdaq rules and our Governance Policy. In addition, our Board of Directors previously determined that Ms. Hill, who retired as a director effective February 11, 2022, satisfied the independence requirements of Nasdaq, the SEC and our Governance Policy. To assist it in making its independence determinations, the Board of Directors adheres to the following standards, which are described in our Governance Policy, in determining independence:
Under any circumstances, a director is not independent if:
•the director is, or has been within the preceding three years, employed by a Carlyle Entity. A Carlyle Entity means us and any parent or subsidiary that we control and consolidate into our financial statements, respectively, filed with the SEC, (but not if we reflect such entity solely as an investment in these financial statements);
•the director, or an immediate family member of that director, accepted any compensation from a Carlyle Entity in excess of $120,000 during any period of twelve consecutive months within the three years preceding the determination of independence, other than (i) compensation for director or committee service, (ii) compensation paid to an immediate family member who is an employee (other than an executive officer) of a Carlyle Entity and (iii) benefits under a tax-qualified retirement plan, or non-discretionary compensation;
•the director is an immediate family member of an individual who is, or at any time during the past three years was, employed by us as an executive officer;
•the director is, or has an immediate family member who is, a partner in, or a controlling shareholder or an executive officer of any organization (including a charitable organization) to which a Carlyle Entity made, or from which a Carlyle Entity received, payments for property or services in the current or any of the past three fiscal years that exceed five percent (5%) of the recipient’s consolidated gross revenues for that year, or $200,000, whichever is more, other than the following:
•payments arising solely from investments in a Carlyle Entity’s securities; or
•payments under non-discretionary charitable contribution matching programs;
•the director is, or has an immediate family member who is, employed as an executive officer of another entity where at any time during the past three years any of the executive officers of a Carlyle Entity serve on the Compensation Committee of such other entity; or
•the director is, or has an immediate family member who is, a current partner of a Carlyle Entity’s outside auditor, or was a partner or employee of a Carlyle Entity’s outside auditor who worked on a Carlyle Entity’s audit at any time during any of the past three years.
The following commercial or charitable relationships will not be considered to be material relationships that would impair a director’s independence:
•if the director or an immediate family member of that director serves as a director or trustee of a charitable organization, and our annual charitable contributions to that organization (excluding contributions by us under any established matching gift program) are less than the greater of $200,000 or five percent (5%) of that organization’s consolidated gross revenues in its most recent fiscal year, provided, however, that in calculating such amount (i) payments arising solely from investments in the Carlyle Entity’s securities and (ii) payments under non-discretionary charitable contribution matching programs shall be excluded; and
•if the director or an immediate family member of that director (or a company for which the director serves as a director or executive officer) invests in or alongside of one or more investment funds or investment companies managed by us or any of our subsidiaries, whether or not fees or other incentive arrangements for us or our subsidiaries are borne by the investing person.
CARLYLE Proxy Statement 2023 | 21 | ||||
Corporate Governance
Board Oversight of Our Firm
Our Board is responsible for oversight of the business and affairs of Carlyle. In order to drive long-term sustainable value for our stakeholders, the Board discusses and receives regular updates on a wide variety of matters affecting the firm and advises our leadership team to help drive success. The Board views our people as one of our most valuable assets. Central to the Board’s oversight of our efforts to drive sustainable value is the goal of assuring that our standards of integrity and ethical conduct are appropriately communicated and embraced by the firm. The Board’s key oversight responsibilities include, among others:
OVERSIGHT OF STRATEGY
Our Board advises management on the development and communication of an effective business strategy for the firm, including with regard to the development of growth opportunities. Key leaders of our business segments present their business plans, budgets and initiatives to the Board and the Board engages members of the leadership team to help devise and execute growth initiatives and steer the firm’s strategic direction.
22 | CARLYLE Proxy Statement 2023 | ||||
Corporate Governance
OVERSIGHT OF RISK MANAGEMENT AND CYBERSECURITY
OVERSIGHT OF RISK MANAGEMENT
Our approach to risk management is to focus on identifying relevant sources of risk, and ensuring that the right personnel from various business segments, divisions and disciplines within the firm are coordinated and effectively collaborating to manage areas of critical risk. Of utmost importance is the Board’s focus on reputational risk, which is routinely evaluated across all aspects of our business.
BOARD OVERSIGHT •Our Board is responsible for oversight of the firm’s enterprise risk management strategy and its risk tolerance. •Other areas of risk management addressed by the Board include global and regional market dynamics, political and legislative risk, environmental and social risk, and technology and cybersecurity risk. While the full Board exercises responsibility for enterprise risk management, each Board committee maintains appropriate risk oversight within the scope of its committee function. | ||||||||||||||
AUDIT COMMITTEE •Undertakes oversight of financial, tax, legal and compliance risks. •Monitors the adequacy of our capital and liquidity positions. | COMPENSATION COMMITTEE •Oversees risks relating to our compensation programs and strategies for attracting, motivating and retaining employees and aligning their interests with the best interest of the firm. | NOMINATING AND CORPORATE GOVERNANCE COMMITTEE •Oversees risk relating to the effectiveness of our Board, the quality of leadership, and succession planning. | ||||||||||||
 | ||||||||||||||
LEADERSHIP TEAM •With the guidance and oversight of the Board and its committees, management of day-to-day judgments on risk matters throughout the business has been delegated to the leadership team. | ||||||||||||||
OVERSIGHT OF CYBERSECURITY
Global Information Technology and Solutions, which we refer to as GTS, is essential for Carlyle to conduct investment activities, manage internal administration activities and connect our global enterprise. Our systems, data, network and infrastructure are continuously monitored and administered by formal controls and risk management processes that also help protect the data and privacy of our employees and investors. Our business continuity plans are designed to allow all critical business functions to continue in an orderly manner in the event of an emergency. Our GTS team works closely with our business segment teams to maintain operational resilience through business continuity planning and annual IT disaster recovery testing, which collectively support the goal of mitigating risk were an emergency to occur.
CARLYLE Proxy Statement 2023 | 23 | ||||
Corporate Governance
Within GTS, Carlyle’s Chief Information Security Officer (CISO) leads our cyber security program, chairs Carlyle’s Information Security Steering Committee (ISSC), and provides cybersecurity status reporting to Carlyle’s Board via its Audit Committee at least annually. Our ISSC meets quarterly and ensures that cybersecurity initiatives are in alignment with Carlyle’s strategic priorities. Carlyle’s cybersecurity program supports security governance, security awareness and training, security engineering and architecture, security risk management, vulnerability management, security monitoring, and 24x7 incident response capabilities. Various components of the cybersecurity program are audited by Carlyle’s Internal Audit team, which co-sources with third-party cybersecurity experts in conducting its assessments. The program is underpinned by the implementation of security best practices, such as those outlined below.
CYBERSECURITY BEST PRACTICES | |||||||||||
•Multi-factor authentication for remote access; privileged access management for system administrators; application whitelisting; laptop encryption; and advanced malware defenses on endpoints •Incident preparedness (e.g., Incident Response (IR) plan, IR retainer, IR playbooks, and testing) and risk transfer via cyber insurance •Independent & continuous security testing, assessment, and vulnerability management •Cyber third-party risk management •Security awareness training, including phishing simulations, for all Carlyle personnel and contractors, as well as additional training for GTS employees regarding cyber best practices •Restrictions on access to personal email accounts; cloud storage; social media, and USB storage devices •Carlyle personnel complete compliance attestations on firm policies, such as our acceptable use policy, upon hire and annually | |||||||||||
Carlyle uses the NIST Cybersecurity Framework as a model for understanding and shaping its cyber security program and is a member of the Financial Services Information Sharing and Analysis Center. | |||||||||||
OVERSIGHT OF OUR CHIEF EXECUTIVE OFFICER AND FINANCIAL PERFORMANCE AND REPORTING
A primary role of the Board is to assess the performance of our Chief Executive Officer. The Compensation Committee plays an important part in such assessment in its role of awarding compensation based on firm and individual performance. Such assessments of the Chief Executive Officer are accomplished throughout the year in meetings of the Board and its committees and as part of the annual year-end compensation review process.
In addition, our Board and the Audit Committee routinely monitor the financial performance of the firm. Our Chief Financial Officer provides the Audit Committee and the Board at each regularly scheduled meeting with critical financial information that allows the Board and its committees to perform their oversight responsibilities. The Audit Committee oversees management’s preparation and presentation of the quarterly and annual financial statements and the operation of our internal controls over financial reporting, including our disclosure and valuation processes.
OVERSIGHT OF SUCCESSION PLANNING AND HUMAN CAPITAL MANAGEMENT
We view our employees as one of our most valuable assets, and our Board and Compensation Committee are responsible for oversight of the firm’s approach to managing human capital. In particular, our Board focuses on supporting management’s extensive initiatives to support and expand diversity, equity and inclusion within our workforce, as well as within portfolio companies acquired by our investment funds. During the COVID-19 pandemic, the Board encouraged management’s efforts to protect the health and safety of our people, and to adapt to a changing work environment, with an emphasis on productivity and wellness. In promoting the efficacy of our employee base, the Board encourages compensation that rewards performance and aligns employee incentives with
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Corporate Governance
the best interests of our stakeholders. Our Chief Human Resources Officer facilitates employee engagement surveys and other key employee data and reports regularly to the Board and Compensation Committee. In addition, our Board oversees our general succession planning strategy and works to ensure that we have sufficient talent, robust development and retention practices and supports our commitment to further diversity, equity and inclusion.
OVERSIGHT OF OUR CULTURE AND VALUES
Our employees around the globe are united by our culture, which is driven by our mission to invest wisely and create value while delivering on our strategic plan to grow, build and perform for all of our stakeholders. We seek to achieve our mission and deliver on our strategic plan by creating a culture where employees strive to excel, deliver for the firm, challenge the status quo and leverage diverse perspectives. We encourage our employees to leave their comfort zone and seek out a leading edge while working with passion, creativity and a relentless determination to deliver for our stakeholders. We seek to foster lateral working relationships across and beyond Carlyle while working as one team to drive long-term value creation. We strive to lead by example in driving and embracing change. We foster diverse perspectives by encouraging our employees to engage with others with candor and diversity of thought, promoting a team conscience that is inclusive and empowering. We demand the highest standards of ethical dealings, and we require collaboration and cooperation among all parts of our firm while also emphasizing an environment where our people feel free to voice their views, ideas and suggestions to achieve the best outcome for our stakeholders. In doing so, we bring to bear the best ideas for investment excellence from all areas within our global footprint, and maximize the value of the services we provide. Our Board oversees our leadership team in its efforts to encourage and sustain our culture and values.
OVERSIGHT OF ESG AND DEI
We strive to embed ESG and DEI in everything we do—it is not a single product or strategy, but a mindset that permeates our culture and investment ethos. Our Board of Directors oversees the firm’s approach to ESG and DEI. The Nominating and Corporate Governance Committee, which takes a leadership role in shaping our corporate governance, including our ESG and Impact strategy, has appointed Linda H. Filler as the Board’s ESG and Impact lead, responsible for oversight of the firm’s work in this area. The Board receives updates on ESG strategy and investment implications at least annually, and receives reports on thematic issues, such as Carlyle’s approach to climate risk and opportunity, and diversity, equity and inclusion from our Global Head of Impact and Chief Diversity, Equity and Inclusion Officer. See “ESG and DEI Highlights” for additional information.
Board Structure and Governance Practices
BOARD LEADERSHIP STRUCTURE
Our Board of Directors oversees our business and affairs and consists of 12 directors. A majority of the directors on our Board are independent.
Two of our founders, David M. Rubenstein and William E. Conway, Jr., currently serve as Co-Chairmen of the Board. Our Chief Executive Officer, Harvey M. Schwartz, also serves as a Board member.
Lawton W. Fitt serves as our Lead Independent Director. She presides at executive sessions of the independent directors and engages with them between Board and Committee meetings. Ms. Fitt works closely with the independent directors to provide objective oversight of our business. She facilitates communications with the Board, the identification of matters for consideration by the Board and management, and the formulation of appropriate guidance to be provided by the independent directors.
We believe this leadership structure currently serves us well. Our Chief Executive Officer utilizes the Board as a resource for insights and advice, while focusing his efforts on leading the business and leadership team. We benefit from our founders’ extensive knowledge and experience in the global investment management industry and the continuity they have provided as Carlyle transitioned from a private partnership to a public company. At the same
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Corporate Governance
time, we benefit from the perspectives of a diverse group of independent directors with a strong Lead Independent Director.
ANNUAL MEETING ATTENDANCE
Directors are encouraged to attend the Annual Meeting. All of our incumbent directors attended the 2022 Annual Meeting, which was held virtually.
BOARD AND COMMITTEE MEETINGS
During 2022, the Board of Directors held 9 meetings, the Audit Committee held 10 meetings, the Compensation Committee held 9 meetings and the Nominating and Corporate Governance Committee held 6 meetings. In 2022, each incumbent director attended at least 75% of each of the meetings of the Board and committees on which he or she served during the period for which he or she was a director or committee member, respectively. The independent directors of the company regularly meet in executive session without management.
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Corporate Governance
BOARD COMMITTEES
Our Board of Directors has three standing committees: the Audit Committee, the Compensation Committee and the Nominating and Corporate Governance Committee.
| AUDIT COMMITTEE | |||||||||||
Members William J. Shaw (Chair) Lawton W. Fitt Derica W. Rice Dr. Thomas S. Robertson Meetings in 2022: 10 | Principal Responsibilities The purpose of the Audit Committee is to provide assistance to the Board of Directors in fulfilling its obligations with respect to matters involving our accounting, auditing, financial reporting, internal control and legal compliance functions, including, without limitation, assisting the board of director’s oversight of: •the quality and integrity of our financial statements, •our compliance with legal and regulatory requirements, •our independent registered public accounting firm’s qualifications and independence, and •the performance of our independent registered public accounting firm and our internal audit function, and directly appointing, retaining, reviewing and terminating our independent registered public accounting firm. The members of our Audit Committee have not participated in the preparation of our financial statements at any time during the past three years and meet the and financial literacy requirements for service on an Audit Committee of a Board of Directors pursuant to the Nasdaq Listing Rules relating to corporate governance matters. The Board of Directors has determined that Mr. Shaw is an “audit committee financial expert” within the meaning of Item 407(d)(5) of Regulation S-K. The Audit Committee’s charter is available on our website at https://ir.carlyle.com. | ||||||||||
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Corporate Governance
| COMPENSATION COMMITTEE | |||||||||||
Members Anthony Welters (Chair) Lawton W. Fitt Mark S. Ordan Derica W. Rice Meetings in 2022: 9 | Principal Responsibilities Our Compensation Committee is responsible for, among other duties and responsibilities: •reviewing and approving, or recommending to the Board for approval, all forms of compensation to be provided to, and employment agreements with, our executive officers, •establishing and reviewing our overall compensation philosophy, and reviewing, approving, and •overseeing the administration of our equity incentive plan, and •reviewing and approving the Executive Stock Ownership Guidelines and the Clawback Policy and monitor compliance therewith. In addition, the Compensation Committee may delegate any or all of its responsibilities to a subcommittee of the Compensation Committee. The Compensation Committee may also delegate to one or more officers of the Company the authority to make certain grants and awards to employees of the Company or its affiliates under the Company’s equity incentive plan as the Compensation Committee deems appropriate and in accordance with the terms of such plan; provided that such delegation is in compliance with the plan and the laws of the state of Delaware. The Compensation Committee’s charter is available on our website at https://ir.carlyle.com. | ||||||||||
NOMINATING AND CORPORATE GOVERNANCE COMMITTEE | |||||||||||
Members Lawton W. Fitt (Chair) Linda H. Filler Anthony Welters Meetings in 2022: 6 | Principal Responsibilities Our Nominating and Corporate Governance Committee is responsible for, among its other duties and responsibilities: •identifying candidates qualified to serve on our Board of Directors, •reviewing the composition of the Board of Directors and its committees, •developing and recommending to the Board of Directors corporate governance principles that are applicable to us, •overseeing the evolution of the Board of Directors, and •taking a leadership role in shaping our corporate governance, including our ESG and Impact strategy. The Nominating and Corporate Governance Committee’s charter is available on our website at https://ir.carlyle.com. | ||||||||||
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Corporate Governance
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
For a description of certain transactions between us and the members of our Compensation Committee, see “Certain Relationships and Related Transactions.”
GOVERNANCE POLICY
The Board of Directors has a governance policy that addresses significant issues of corporate governance and sets forth procedures by which our Board carries out its responsibilities. The governance policy is available on our website at https://ir.carlyle.com.
CODE OF ETHICS FOR FINANCIAL PROFESSIONALS
We have a Code of Conduct and a Code of Ethics for Financial Professionals, which apply to our principal executive officers, principal financial officer and principal accounting officer. Each of these codes is available on our website at https://ir.carlyle.com. We intend to disclose any legally required amendment to or waiver of the Code of Ethics for Financial Professionals and any waiver of our Code of Conduct on behalf of an executive officer or director either on our website or in a Current Report on Form 8-K filing with the SEC.
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Corporate Governance
Stakeholder Engagement
We continuously engage with our fund investors, shareholders, portfolio companies, people, and communities to help us set priorities, assess our progress, and enhance our corporate governance practices. We facilitate these constructive conversations through consistent individual and small group meetings, industry conferences, Carlyle conferences, qualitative and quantitative perception surveys, and engagements with various ESG rating firms. We are committed to ongoing, candid, and transparent communications with all of our stakeholders.
In 2022, we continued to enhance our approach to interactions with our stakeholders building on our successful virtual engagement program commenced during the COVID-19 pandemic, while also significantly increasing our participation in hybrid and in-person meetings.
Highlights from 2022 include:
•Hosted detailed quarterly earnings calls to discuss our results with up to 16 covering analysts and their teams as well as hundreds of external stakeholders for each call;
•Organized periodic and ongoing update calls, in-person meetings at investor offices, and virtual meetings with a majority of our external shareholders and potential new shareholders, who represent a vast majority of our externally held common shares;
•Attended various in-person and virtual investor conferences to present or discuss Carlyle’s opportunity set and growth objectives as well as our financial results, hosting several hundred current or potential new investors in individual or group meetings;
•Conducted quarterly update calls with our fund investors to provide transparency regarding their investments as well as our global insights and perspectives during a time of significant uncertainty;
•Held a hybrid Global Investor Conference and Europe Investor Conference, which were attended by over 1,700 fund investors and employees;
•Organized a Sustainability Workshop in May 2022 that welcomed more than 60 guests from our portfolio companies and included sessions on developing resilient climate strategies and leading practices for employee engagement;
•Continued to deepen the integration of ESG within our investment teams and portfolio companies, with ESG assessments included in most Carlyle investment decisions using proprietary due diligence tools in our GPE and Global Credit segments;
•Invested in enhancing DEI through our second year of the DEI Incentive Awards program, where we granted approximately $2 million in awards to 70 employees from around the globe who made an impact on DEI at Carlyle; and
•Launched the DEI Leadership Network, a coalition of portfolio company CEOs around the globe to develop a peer group for shared resources and insights that can help advance DEI within their respect companies.
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Item 2. Ratification of Ernst & Young LLP as Our Independent Registered Public Accounting Firm for 2023
Our Audit Committee has selected Ernst & Young as our independent registered public accounting firm to perform the audit of our consolidated financial statements for 2023. Representatives of Ernst & Young are expected to be present at our Annual Meeting, will have an opportunity to make a statement if they so desire and will be available to respond to appropriate questions.
BOARD RECOMMENDATION
The Board unanimously recommends a vote “FOR” the ratification of the selection of Ernst & Young as our independent registered public accounting firm for 2023. | ||
The appointment of Ernst & Young as our independent registered public accounting firm for 2023 is being submitted to our shareholders for ratification at the Annual Meeting. Our Board recommends that the shareholders vote “FOR” the ratification of the selection of Ernst & Young as our independent registered public accounting firm. The submission of the appointment of Ernst & Young is required neither by law nor by our bylaws. Our Board is nevertheless submitting it to our shareholders to ascertain their views. If our shareholders do not ratify the appointment, the selection of another independent registered public accounting firm may be considered by the Audit Committee. Even if the selection is ratified, the Audit Committee in its discretion may select a different independent registered public accounting firm at any time during the year if it determines that such a change would be in the best interests of the Company and our shareholders.
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Audit Matters
Fees Paid to Independent Registered Public Accounting Firm
The following table summarizes the aggregate fees, including expenses, for professional services provided by Ernst & Young for the years ended December 31, 2022 and 2021 (dollars in millions):
Year Ended December 31, 2022 | |||||||||||||||||||||||
| The Carlyle Group Inc. | Carlyle Funds | Total | |||||||||||||||||||||
| Audit Fees | $ | 5.7 | (a) | $ | 28.9 | (d) | $ | 34.6 | |||||||||||||||
| Audit-Related Fees | 17.3 | (b) | 26.5 | (e) | 43.8 | ||||||||||||||||||
| Tax Fees | 2.1 | (c) | 1.1 | (d) | 3.2 | ||||||||||||||||||
| All Other Fees | — | — | — | ||||||||||||||||||||
| Total | $ | 25.1 | $ | 56.5 | $ | 81.6 | |||||||||||||||||
Year Ended December 31, 2021 | |||||||||||||||||||||||
| The Carlyle Group Inc. | Carlyle Funds | Total | |||||||||||||||||||||
| Audit Fees | $ | 6.2 | (a) | $ | 22.3 | (d) | $ | 28.5 | |||||||||||||||
| Audit-Related Fees | 1.5 | (b) | 33.8 | (e) | 35.3 | ||||||||||||||||||
| Tax Fees | 4.1 | (c) | 1.3 | (d) | 5.4 | ||||||||||||||||||
| All Other Fees | — | — | — | ||||||||||||||||||||
| Total | $ | 11.8 | $ | 57.4 | $ | 69.2 | |||||||||||||||||
References to Carlyle refer to the Company and our consolidated subsidiaries and references to Carlyle Funds refer to the investment funds and vehicles advised by Carlyle.
(a)Audit Fees consisted of fees for (1) the audits of our consolidated financial statements included in our Annual Report on Form 10-K and our internal controls over financial reporting, and services required by statute or regulation; (2) reviews of interim condensed consolidated financial statements included in our quarterly reports on Form 10-Q; (3) comfort letters, consents and other services related to SEC and other regulatory filings. This also includes fees for accounting consultation billed as audit services.
(b)Audit-Related Fees consisted of due diligence in connection with acquisitions, and other audit and attest services not required by statute or regulation.
(c)Tax Fees consisted of fees for services rendered for tax compliance and tax planning and advisory services. We also use other accounting firms to provide these services. Fees for tax compliance services were approximately $0.5 million and $0.5 million for the years ended December 31, 2022 and 2021, respectively.
(d)Ernst & Young also provided audit and tax services to certain investment funds managed by Carlyle in its capacity as the general partner or investment advisor. The tax services provided consist primarily of tax advisory services. We also use other accounting firms to provide these services. Fees for tax compliance services were approximately $0.3 million and $0.2 million for the years ended December 31, 2022 and 2021, respectively.
(e)Audit-Related Fees included assurance, merger and acquisition due diligence services provided in connection with contemplated investments by Carlyle-sponsored investment funds and attest services not required by statute or regulation. In addition, Ernst & Young provided audit, audit-related, tax and other services to certain Carlyle fund portfolio companies, which are approved directly by the portfolio company’s management and are not included in the amounts presented here. We also use other accounting firms to provide these services.
Pre-Approval Policies and Procedures
Our Audit Committee Charter, which is available on our website at www.carlyle.com under “Shareholders,” requires the Audit Committee to approve in advance all audit and non-audit related services to be provided by our independent registered public accounting firm in accordance with the audit and non-audit related services pre-approval policy. All services reported in the Audit, Audit-Related, and Tax categories above were approved by the Audit Committee.
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Audit Matters
Report of our Audit Committee
Our Audit Committee consists of Messrs. Shaw (Chair), Rice and Robertson and Ms. Fitt. The purpose of the Audit Committee is to provide assistance to the Board of Directors in fulfilling its obligations with respect to matters involving our accounting, auditing, financial reporting, internal control and legal compliance functions, including, without limitation, assisting the Board of Directors’ oversight of:
•the quality and integrity of our financial statements;
•our compliance with legal and regulatory requirements;
•our independent registered public accounting firm’s qualifications and independence; and
•the performance of our independent registered public accounting firm and our internal audit function,
and directly appointing, retaining, reviewing and terminating our independent registered public accounting firm. The members of our Audit Committee meet the independence standards and financial literacy requirements for service on an audit committee of a Board of Directors pursuant to the federal securities laws and Nasdaq Listing Rules relating to corporate governance matters. The Board of Directors has determined that Mr. Shaw is an “audit committee financial expert” within the meaning of Item 407(d)(5) of Regulation S-K. The Audit Committee’s charter is available on our website at https://ir.carlyle.com.
As noted above, the Audit Committee is directly responsible for appointing, retaining and reviewing our independent registered public accounting firm, Ernst & Young, which process includes, among other things, reviewing and evaluating the qualifications, performance and independence of the audit partners responsible for our audit, and overseeing the required rotation of the lead audit partner. In appointing Ernst & Young, the Audit Committee considered, among other things, the quality and efficiency of the services, the technical capabilities of the engagement teams and the engagement teams’ understanding of our Company’s business. The Audit Committee and the Board believe that the continued retention of Ernst & Young to serve as the Company’s independent registered public accounting firm is in the best interests of the Company and its shareholders and have recommended that shareholders ratify the appointment of Ernst & Young as the Company’s independent registered public accounting firm for the fiscal year 2023.
The Audit Committee discussed the auditors’ review of our quarterly financial information with the auditors prior to the release of such information and the filing of our quarterly reports with the SEC. The Audit Committee also reviewed and discussed with management and Ernst & Young our audited year-end financial statements.
Further, the Audit Committee discussed with Ernst & Young the matters required to be discussed by the applicable standards of the Public Company Accounting Oversight Board (“PCAOB”) and the SEC and received the written disclosures and the letter from Ernst & Young required by applicable requirements of the PCAOB regarding the independent accountant’s communications with the Audit Committee concerning independence and discussed with the auditors the auditors’ independence. In determining Ernst & Young’s independence, the Audit Committee considered, among other things, whether Ernst & Young’s provision of audit and non-audit services, and the amount of fees paid for such services, were compatible with the independence of the independent registered public accountants. The Audit Committee also discussed with the auditors and our financial management matters related to our internal controls over financial reporting. Based on these discussions and the written disclosures received from Ernst & Young, the Audit Committee recommended that the Board include the audited financial statements in the Annual Report on Form 10-K for the fiscal year ended December 31, 2022, for filing with the SEC.
William J. Shaw (Chair) Lawton W. Fitt Derica W. Rice Dr. Thomas S. Robertson | |||||
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Our leadership team operates under the strategic direction of our Chief Executive Officer. The following table sets forth the names, ages and positions of our executive officers.
| Name | Age | Position | ||||||||||||
| Harvey M. Schwartz | 58 | Chief Executive Officer and Director | ||||||||||||
| Curtis L. Buser | 59 | Chief Financial Officer | ||||||||||||
| Jeffrey W. Ferguson | 57 | General Counsel | ||||||||||||
| Christopher Finn | 65 | Chief Operating Officer | ||||||||||||
| Bruce M. Larson | 60 | Chief Human Resources Officer | ||||||||||||
 | Harvey M. Schwartz | ||||
Mr. Schwartz is the Chief Executive Officer of Carlyle and a member of the Board of Directors. He has served in such capacity since February 15, 2023 and is based in New York. Mr. Schwartz is the former President and Co-Chief Operating Officer of The Goldman Sachs Group, Inc. He joined Goldman Sachs in 1997 and subsequently held numerous senior leadership positions including Chief Financial Officer, Global Co-Head of the Securities Division, Head of Securities Division Sales, Head of North American Sales and Co-Head of the Americas Financing Group. He additionally served as a member of the firm’s Management Committee and co-headed its Risk Committee, Steering Committee on Regulatory Reform, Capital Committee and Finance Committee. Mr. Schwartz established the firm’s Investment Policy Committee on which he also served as a member. Prior to Goldman Sachs, Mr. Schwartz spent a decade working at several financial firms, including Citicorp, from 1990 through 1997. As both an investor and advisor, he is currently involved in a range of investment and philanthropic endeavors. These efforts include a focus on mental health and developing future business leaders, including women and young people seeking a career in finance. He serves as the Group Chairperson and Non-Executive Director of The Bank of London, a clearing and payments bank with operations in London and New York City. In addition, Mr. Schwartz serves on the board of SoFi Technologies, Inc., a San Francisco-based fintech company, and One Mind, a nonprofit that accelerates collaborative research and advocacy to enable all individuals facing brain health challenges to build healthy, productive lives. Mr. Schwartz earned his BA from Rutgers University, where he is a member of the university’s Board of Governors and its Hall of Distinguished Alumni. He received his MBA from Columbia University. | |||||
 | Curtis L. Buser | ||||
Mr. Buser is the Chief Financial Officer of Carlyle and has served in such capacity since December 2014. From May 2014 until December 2014, Mr. Buser served as Carlyle’s Interim Chief Financial Officer. Mr. Buser joined Carlyle in 2004 as a managing director and served as the firm’s Chief Accounting Officer until May 2014. He is a member of Carlyle’s Leadership and Operating Committees. Prior to joining Carlyle, Mr. Buser was an audit partner with Ernst & Young, LLP. He began his career with Arthur Andersen in 1985 and was admitted to its partnership in 1997. Mr. Buser graduated from Georgetown University. | |||||
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Executive Officers
 | Jeffrey W. Ferguson | ||||
Mr. Ferguson is a Managing Director and the firm’s General Counsel and has served in such capacity since 1999. Mr. Ferguson is based in Washington, DC. Mr. Ferguson joined Carlyle in 1999. In his capacity as the global General Counsel of Carlyle, he serves as the head of the firm’s legal and compliance functions. He is also a member of Carlyle’s Leadership and Operating Committees. Prior to joining Carlyle, Mr. Ferguson worked as an attorney with Latham & Watkins and Vinson & Elkins. Mr. Ferguson received his law degree from University of Virginia School of Law in 1991. He also received an undergraduate degree in political science from University of Virginia, where he was a member of Phi Beta Kappa. Mr. Ferguson is a member of the bars of the District of Columbia and Virginia. | |||||
 | Christopher Finn | ||||
Mr. Finn is Chief Operating Officer of Carlyle and has served in such capacity since March 2019. Mr. Finn is a member of Carlyle's Leadership and Operating Committees. In addition, he chairs or sits on several fund investment committees, and has been a member of the board of directors of many Carlyle portfolio companies including buyout, technology, and real estate investments. Prior to joining the firm in 1996, Mr. Finn served as Executive Vice President of the Overseas Private Investment Corporation (OPIC), the U.S. Government agency that provides financing to the U.S. investors in the developing world. Mr. Finn is an honors graduate of Harvard College. | |||||
 | Bruce M. Larson | ||||
Mr. Larson is the Chief Human Resources Officer at Carlyle and has served in such capacity since he joined the firm in November 2019. He is also a member of Carlyle's Leadership and Operating Committees. Prior to joining Carlyle, Mr. Larson served as Partner and Head of Human Capital in Asia Pacific and India at Goldman Sachs. Mr. Larson earned an MBA from University of Chicago and a BA in Finance and Japanese from the University of Utah. | |||||
There are no family relationships among any of our directors or executive officers.
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Item 3. Management Proposal to Reorganize the Board of Directors into One Class
Our certificate of incorporation provides that the Board of Directors is divided into three classes, with each class being elected every three years. The Board has unanimously adopted and recommends that shareholders approve the amended and restated certificate of incorporation including an amendment to our certificate of incorporation that would declassify the Board over a three-year period, so that all directors stand for election annually from and after the 2026 Annual Meeting of Shareholders.
The Board, with the assistance of the Nominating and Corporate Governance Committee, regularly reviews our corporate governance practices to ensure that such practices, including the procedure for electing directors, remain in the best interests of Carlyle and our shareholders. At the 2022 Annual Meeting, shareholders approved, and the Board supported, a non-binding shareholder proposal calling for the Board to take the steps necessary to declassify the Board.
While the Board continues to believe that there are important benefits to a classified board structure, it recognizes the potential advantages of declassification, including the ability of shareholders to evaluate directors annually. The Board also recognizes the growing sentiment among shareholders and the investment community in favor of annual elections. After carefully weighing these and other factors (including that the number of companies with classified boards continue to decline), the Board has determined that it is in the best interests of Carlyle and our shareholders to declassify the Board over a three-year period and recommends that shareholders approve the proposed amendment.
If the proposed amended and restated certificate of incorporation, including the proposed amendment, is approved by shareholders, the classified board structure will be phased out over a three-year period beginning at the 2024 Annual Meeting. Directors elected to three-year terms prior to the effectiveness of the proposed amended and restated certificate of incorporation (including the Class III directors elected at this Annual Meeting) will complete those terms. The term of the Class I directors is set to expire at the 2024 Annual Meeting and the term of the Class II directors is set to expire at the 2025 Annual Meeting, at which meetings the directors will stand for election on an annual basis, for one-year terms. Beginning with the 2026 Annual Meeting, all directors will stand for election annually.
BOARD RECOMMENDATION
The Board unanimously recommends a vote “FOR” the management proposal to reorganize the Board of Directors into one class. | ||
VOTE REQUIRED AND IMPACT OF VOTE
Our certificate of incorporation provides that no amendment to the certificate of incorporation shall become effective without the affirmative vote or consent of shareholders holding at least 90% of the voting power of our outstanding shares of common stock unless Carlyle obtains an opinion of counsel to the effect that such amendment
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Management Proposal
will not affect the limited liability of any shareholder under the Delaware General Corporation Law. Carlyle has obtained such an opinion, such that the affirmative vote of a majority of the voting power of the outstanding common stock entitled to vote thereon is required to approve the proposed amendment. If approved by the required vote, the proposed amendment will become legally effective upon the filing of an amended and restated certificate of incorporation reflecting the proposed amendment with the Secretary of State of the State of Delaware, which we will file promptly following the Annual Meeting.
If shareholders do not approve the proposed amendment by the requisite vote, the amended and restated certificate of incorporation will not be filed with the Secretary of State of the State of Delaware and our Board of Directors will remain classified.
TEXT OF THE AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
The text of the amended and restated certificate of incorporation is set forth in Appendix B to this Proxy Statement, with proposed deletions reflected by “strike-through” text and proposed additions reflected by “underline” text. The above summary of the proposed amendment is qualified in its entirety by reference to Appendix B.
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Item 4. Approval of The Carlyle Group Inc. Amended and Restated 2012 Equity Incentive Plan
Our 2012 Equity Incentive Plan was initially adopted on May 2, 2012, and was later amended and restated effective January 1, 2020 and June 1, 2021 (as amended, the “Existing Plan” or the “Equity Incentive Plan”). As of March 15, 2023, approximately 3,466,887 shares remained available for future grants under the Existing Plan (of the 16,000,000 shares that were initially available for grants as of the approval of the Existing Plan on June 1, 2021), and there were a total of 17,973,184 shares underlying previously granted restricted stock units that remained outstanding and eligible to vest under the Existing Plan (counting the number of shares underlying such outstanding awards based on assumed maximum level performance in the case of awards subject to vesting based on uncompleted performance periods). Additionally, as of March 15, 2023, there were a total of 6,826,068 shares underlying previously granted restricted stock units that remained outstanding and eligible to vest pursuant to an inducement equity grant to our Chief Executive Officer (counting the number of shares underlying such outstanding awards based on assumed maximum level performance in the case of awards subject to vesting based on uncompleted performance periods). Other than as described in the preceding sentences, there are no outstanding equity awards covering shares of our common stock pursuant to the Existing Plan or otherwise.
Our Board of Directors recommends that you approve Carlyle’s Amended and Restated 2012 Equity Incentive Plan in the form attached as Appendix C and marked to show the proposed amendments to the Existing Plan (the “Amended Plan”), which further amends and restates the Existing Plan to (i) increase the share reserve under the Amended Plan by an additional 23,800,000 shares (from 16,000,000 shares under the Existing Plan to 39,800,000 shares, of which approximately 27,266,887 shares would be available for future grants following and subject to approval of the Amended Plan), (ii) extend the term of the Amended Plan to May 30, 2033, (iii) impose a minimum one-year vesting condition upon awards granted under the Amended Plan (subject to certain exceptions) and (iv) make certain other technical amendments to the Existing Plan to conform with best practices.
Our Board of Directors and the Compensation Committee have determined that Carlyle’s and your best interests will be served by the approval of this proposal. The Board of Directors believes that by allowing Carlyle to continue to offer its employees, directors, advisors and consultants equity-based and other incentive compensation, Carlyle will promote the alignment of compensation with the interests of our shareholders.
We are not seeking to make amendments to the terms of the Existing Plan other than those described in this proposal.
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BOARD RECOMMENDATION
The Board unanimously recommends a vote “FOR” the approval of The Carlyle Group Inc. Amended and Restated 2012 Equity Incentive Plan. | ||
SUMMARY OF THE AMENDED PLAN
The following description of the Amended Plan is not complete and is qualified by reference to the full text of the Amended Plan, which is attached as Appendix C hereto. The Amended Plan will continue to be a source of equity-based awards permitting us to grant to our senior Carlyle professionals, employees, directors and consultants non-qualified options, share appreciation rights, common shares, restricted common shares, deferred restricted common shares, phantom restricted common shares and other awards based on our common shares. As of March 15, 2023, approximately 2,100 persons were eligible to participate in the Amended Plan.
ADMINISTRATION
The Compensation Committee will administer the Amended Plan. However, the Board of Directors may delegate such authority to another committee or subcommittee of the Board of Directors (or the full Board of Directors). We refer to the Board of Directors or the committee or subcommittee thereof to whom authority to administer the Amended Plan has been delegated (including, without limitation, the Compensation Committee), as the case may be, as the “Administrator.” The Administrator will determine who will receive awards under the Amended Plan, as well as the form of the awards, the number of shares underlying the awards and the terms and conditions of the awards consistent with the terms of the Amended Plan. The Administrator also will have full authority to interpret and administer the Amended Plan, which determinations will be final and binding on all parties concerned.
Under the terms of the Amended Plan, vesting of (or lapsing of restrictions on) an award at the time of grant may not occur any more rapidly than on the first anniversary of the grant date for such award (or the date of commencement of employment or service, in the case of a grant made in connection with a participant’s commencement of employment or service), other than (i) in connection with a change in control or (ii) as a result of a participant’s death or disability; provided, that such minimum vesting condition will not be required on awards covering, in the aggregate, a number of shares not to exceed 5% of the Absolute Share Limit, as described below.
SHARES SUBJECT TO THE AMENDED PLAN
The total number of our common shares that may be issued pursuant to awards granted under the Amended Plan shall be 39,800,000 (the “Absolute Share Limit”). The shares may consist, in whole or in part, of unissued shares or treasury shares. The issuance of shares or payment of cash upon the exercise, vesting or settlement of an award or in consideration of the cancellation or termination of an award shall reduce the total number of shares available under the Amended Plan, as applicable. If shares are not issued or are withheld from payment of an award to satisfy tax obligations with respect to the award, such shares will not be added back to the aggregate number of shares with respect to which awards may be granted under the Amended Plan, but rather will count against the aggregate number of shares with respect to which awards may be granted under the Amended Plan. When an option or share appreciation right is granted under the Amended Plan, the number of shares subject to the option or share appreciation right will be counted against the aggregate number of shares with respect to which awards may be granted under the Amended Plan as one share for every share subject to such option or share appreciation right. No shares will be added back to the share reserve under the Amended Plan with respect to exercised share appreciation rights granted under the Amended Plan. Additionally, no shares will be added back to the share reserve under the Amended Plan in the event that (i) a portion of the shares covered by an option are tendered to the Company or “net settled” to cover payment of the option exercise price or (ii) the Company utilizes the proceeds received upon option exercise to repurchase shares on the open market or otherwise. In the event that any awards under the Amended Plan terminate or lapse for any reason (in whole or in part), including, without limitation, due to failure to achieve performance-vesting or service-vesting criteria, on or after the date of shareholder approval of the Amended Plan without payment of consideration, the number of shares subject to such terminated or lapsed portion
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of awards shall be available for future award grants under the Amended Plan. Under the Amended Plan, the maximum number of shares subject to awards granted during a calendar year to any non-employee director serving on the Board of Directors, taken together with any cash fees paid to such non-employee director during such calendar year, shall not exceed $750,000 in total value (with the value of awards being calculated based on the grant date fair value of such awards for financial reporting purposes).
OPTIONS AND SHARE APPRECIATION RIGHTS
The Administrator may award non-qualified options under the Amended Plan. Options granted under the Amended Plan will become vested and exercisable at such times and upon such terms and conditions as may be determined by the Administrator at the time of grant, but an option generally will not be exercisable for a period of more than 10 years after it is granted. To the extent permitted by the Administrator, the exercise price of an option may be paid in cash or its equivalent, in shares having a fair market value equal to the aggregate option exercise price, partly in cash and partly in shares and satisfying such other requirements as may be imposed by the Administrator or through the delivery of irrevocable instructions to a broker to sell shares obtained upon the exercise of the option and to deliver promptly to us an amount out of the proceeds of the sale equal to the aggregate option exercise price for the common shares being purchased or through net settlement in shares.
The Administrator may grant share appreciation rights independent of or in conjunction with an option. Each share appreciation right granted independent of an option shall entitle a participant upon exercise to an amount equal to (i) the excess of (A) the fair market value on the exercise date of one share over (B) the exercise price per share, multiplied by (ii) the number of shares covered by the share appreciation right, and each share appreciation right granted in conjunction with an option will entitle a participant to surrender to us the option and to receive such amount. Payment will be made in shares and/or cash (any common share valued at fair market value), as determined by the Administrator.
No “repricing” of options or share appreciation rights will be permitted without shareholder approval. Additionally, no dividends, dividend equivalent payments or similar distributions will be made with respect to options or share appreciation rights prior to the date of any actual share issuance upon exercise or settlement or the option or share appreciation right.
OTHER EQUITY-BASED AWARDS
The Administrator, in its sole discretion, may grant or sell shares, restricted shares, deferred restricted shares, phantom restricted shares and other awards that are valued in whole or in part by reference to, or are otherwise based on the fair value of, our shares. Any of these other equity-based awards may be in such form, and dependent on such conditions, as the Administrator determines, including without limitation the right to receive, or vest with respect to, one or more shares (or the equivalent cash value of such shares) upon the completion of a specified period of service, the occurrence of an event and/or the attainment of performance objectives. The Administrator may in its discretion determine whether other equity-based awards will be payable in cash, shares or a combination of both cash and shares. To the extent that any dividends or dividend equivalent payments may be paid with respect to any other equity-based awards, no such dividend or dividend equivalent payments will be made unless and until the corresponding portion of the underlying award becomes earned and vested in accordance with its terms.
ADJUSTMENTS UPON CERTAIN EVENTS
In the event of any change in the outstanding shares by reason of any share distribution or split, reorganization, recapitalization, merger, consolidation, spin-off, combination, combination or transaction or exchange of shares or other corporate exchange, or any distribution to holders of shares other than regular cash dividends, or any transaction similar to the foregoing, the Administrator in its sole discretion and without liability to any person will make such substitution or adjustment, if any, as it deems to be equitable, as to (i) the number or kind of shares or other securities issued or available for future grant under our Amended Plan or pursuant to outstanding awards, (ii) the option price or exercise price of any option or share appreciation right and/or (iii) any other affected terms of such awards.
CHANGE IN CONTROL
In the event of a change in control (as defined in the Amended Plan), the Amended Plan provides that the Administrator may, but shall not be obligated to (i) accelerate, vest or cause the restrictions to lapse with respect to
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all or any portion of an award, (ii) cancel awards for fair value (which, in the case of options or share appreciation rights, shall be equal to the excess, if any, of the fair market value of a share at the time of such change in control over the corresponding exercise price of the option or share appreciation right), (iii) provide for the issuance of substitute awards that will substantially preserve the otherwise applicable terms of any affected awards previously granted under the Amended Plan as determined by the Administrator in its sole discretion or (iv) provide that, with respect to any awards that are options or share appreciation rights, for a period of at least 15 days prior to the change in control, such options and share appreciation rights will be exercisable as to all shares subject thereto and that upon the occurrence of the change in control, such options and share appreciation rights will terminate.
TRANSFERABILITY
Unless otherwise determined by our Administrator, no award granted under the plan will be transferable or assignable by a participant in the plan, other than by will or by the laws of descent and distribution.
AMENDMENT, TERMINATION AND TERM
The Administrator may amend or terminate the Amended Plan, but no amendment or termination shall be made without the consent of a participant, if such action would materially diminish any of the rights of the participant under any award theretofore granted to such participant under the Amended Plan; provided, however, that the Administrator may amend the Amended Plan and/or any outstanding awards in such manner as it deems necessary to permit the Amended Plan and/or any outstanding awards to satisfy applicable requirements of the Internal Revenue Code or other applicable laws. The Amended Plan will have a term of 10 years from the date on which the Amended Plan is approved by our shareholders (i.e., until May 30, 2033).
U.S. TAX CONSEQUENCES OF THE AMENDED PLAN AWARDS
INTRODUCTION
The following general discussion of the federal income tax consequences of awards to be granted under the Amended Plan is based on current federal tax laws and regulations, does not purport to be a complete description of the federal income tax laws, and does not purport to be a representation as to the actual tax consequences that any participant or the Company may in fact incur. Participants may also be subject to certain state and local taxes, which are not described below.
NON-QUALIFIED STOCK OPTIONS
If the award granted is a non-qualified stock option, no income is realized by the participant at the time of grant of the option, and no deduction is available to the Company at such time. At the time of a cash or equivalent exercise, ordinary income is realized by the participant in an amount equal to the excess, if any, of the fair market value of the Common Stock on the date of exercise over the option exercise price, and the Company receives a tax deduction for the same amount, subject to Section 162(m), discussed below. Upon disposition, any difference between the participant’s tax basis in the Common Stock and the amount realized on disposition of the shares is treated as capital gain or loss.
SHARE APPRECIATION RIGHTS
The participant realizes no income at the time a share appreciation right is granted, and no deduction is available to the Company at such time. When the right is exercised, ordinary income is realized by the participant in the amount of the cash and/or the fair market value of the Common Stock received by the participant, and the Company shall be entitled to a deduction of the same amount, subject to Section 162(m), discussed below.
RESTRICTED STOCK UNITS
If the award granted is an RSU, the participant will not recognize any income for federal income tax purposes when RSUs are granted because restricted share units are not considered to be “property” for purposes of the Internal Revenue Code and no deduction is available to the Company at such time. After the RSUs vest and are settled, the participant will be required to treat as ordinary income an amount equal to the full fair market value of the shares of Common Stock and any cash received. If the participant sells the shares of Common Stock, the participant generally will have a taxable capital gain (or loss). Because the participant will have recognized income when any stock was
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distributed, the amount of this gain (or loss) is the difference between the sale price and the fair market value of the stock on the date it was distributed. Subject to Section 162(m), discussed below, the Company is generally entitled to a deduction equal to the amount of ordinary income recognized by the participant as the result of an RSU award. If a participant forfeits his or her RSU award, no gain or loss is recognized and no deduction is allowed.
RESTRICTED STOCK AWARDS
Subject to Section 162(m), discussed below, the Company receives a deduction and the participant recognizes taxable income equal to the fair market value of the restricted stock award at the time the restrictions on the stock awarded lapse, unless the participant elects to recognize such income immediately by so electing, within 30 days after the date of grant by the Company to the participant of a restricted stock award, as permitted under Section 83(b) of the Internal Revenue Code, in which case both the Company’s deduction and the participant’s inclusion in income occur on the grant date. The value of any other stock award granted to participants shall be taxable as ordinary income to such participant in the year in which such stock is received, and the Company will be entitled to a corresponding tax deduction, subject to Section 162(m).
SECTION 162(m) OF THE INTERNAL REVENUE CODE
Section 162(m) generally disallows a tax deduction to public companies for compensation over $1,000,000 paid to the principal executive officer, the principal financial officer and the three other most highly compensated executive officers of the Company or any of its subsidiaries in any taxable year of the Company.
SECTION 409A OF THE INTERNAL REVENUE CODE
Section 409A of the Internal Revenue Code (“Section 409A”) covers certain nonqualified deferred compensation arrangements and generally establishes rules that must be followed with respect to covered deferred compensation arrangements in order to avoid the imposition of an additional 20% tax (plus interest) on the service provider who is entitled to receive the deferred compensation. Certain awards that may be granted under the Amended Plan may constitute “deferred compensation” within the meaning of and subject to Section 409A. While the Compensation Committee intends to administer and operate the Amended Plan and establish terms (or make required amendments) with respect to awards subject to Section 409A in a manner that will avoid the imposition of additional taxation under Section 409A upon a participant, there can be no assurance that additional taxation under Section 409A will be avoided in all cases.
NEW PLAN BENEFITS UNDER THE AMENDED PLAN
Because future awards under the Amended Plan will be granted at the discretion of the Compensation Committee, the type, number, recipients, and other terms of such awards cannot be determined at this time.
REGISTRATION WITH THE SEC
We intend to file a Registration Statement on Form S-8 with the SEC registering the additional shares of Common Stock that will be issuable under the Amended Plan if it is approved by shareholders.
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AWARDS PREVIOUSLY GRANTED UNDER THE EXISTING PLAN
The following table sets forth the equity awards issued under the Existing Plan that have been received as of March 15, 2023 to the following persons or groups: (i) our chief executive officer; (ii) each of our other Named Executive Officers; (iii) our current executive officers as a group; (iv) our current non-executive officer directors as a group; (v) each nominee for election as a director; and (vi) all employees, including all current officers who are not executive officers, as a group. There have been no equity awards granted to (i) any associate of any current director who is not a Named Executive Officer or nominee or (ii) any associate of any executive officer. In addition, except as may be set forth below, no person was granted equity awards under the Existing Plan which in the aggregate accounted for five percent or more of the total number of shares available for issuance under the Existing Plan.
On March 15, 2023, the closing price of our common stock, as reported on Nasdaq, was $30.59.
| Name and Position | RSU Grants (1) | ||||
Harvey M. Schwartz, Chief Executive Officer and Director | — | ||||
Curtis L. Buser, Chief Financial Officer | 1,706,257 | ||||
William E. Conway, Jr., Founder, Co-Chairman and Director | — | ||||
Daniel A. D’Aniello, Founder, Chairman Emeritus and Director | — | ||||
David M. Rubenstein, Founder, Co-Chairman and Director | — | ||||
Jeffrey W. Ferguson, General Counsel | 947,850 | ||||
Christopher Finn, Chief Operating Officer | 1,810,338 | ||||
Bruce M. Larson, Chief Human Resources Officer | 680,301 | ||||
Peter J. Clare, Former Chief Investment Officer for Corporate Private Equity, Chairman of Americas Private Equity and Director (2) | 1,108,006 | ||||
Kewsong Lee, Former Chief Executive Officer (3) | 6,531,006 | ||||
Linda H. Filler, Director | 5,236 | ||||
Lawton W. Fitt, Lead Independent Director | 57,166 | ||||
James H. Hance, Jr., Operating Executive and Director | 44,231 | ||||
Mark S. Ordan, Director | 5,236 | ||||
Derica W. Rice, Director | 9,221 | ||||
Thomas S. Robertson, Director | 57,166 | ||||
William J. Shaw, Director | 57,166 | ||||
Anthony Welters, Director | 40,589 | ||||
| All Current Executive Officers as a Group | 5,144,746 | ||||
| All Current Non-Executive Officer Directors as a Group | 276,011 | ||||
| All Employees, other than Executive Officers, as a Group (4) | 46,425,660 | ||||
(1)The number of shares to be issued in respect of unvested performance-vesting RSUs has been calculated based on the assumption that the “maximum” level of performance applicable to such RSUs will be achieved.
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(2)Of the RSU Grants awarded to Mr. Clare, 278,412 RSUs would be forfeited upon the retirement of Mr. Clare pursuant to the terms of the applicable award agreement.
(3)Of the RSU Grants awarded to Mr. Lee, 1,347,960 RSUs were forfeited upon the termination of Mr. Lee’s employment in August 2022.
(4)Amounts shown exclude awards granted to employees who departed from the Company on or prior to March 15, 2023.
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
The table set forth below provides information concerning the awards that may be issued under the “Equity Incentive Plan” as of December 31, 2022:
| Plan category | Number of securities to be issued upon exercise of outstanding options, warrants and rights (1) | Weighted- average exercise price of outstanding options, warrants and rights | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column) (2) | |||||||||||||||||
| Equity compensation plans approved by security holders | 10,865,248 | — | 12,861,371 | |||||||||||||||||
| Equity compensation plans not approved by security holders | — | — | — | |||||||||||||||||
| Total | 10,865,248 | — | 12,861,371 | |||||||||||||||||
(1)Reflects the outstanding number of our restricted stock units granted under the Equity Incentive Plan as of December 31, 2022.
(2)Consists of shares of our common stock available for future issuance under our Equity Incentive Plan, including nonqualified stock options, stock appreciation rights, RSUs, restricted stock, performance-based awards and other equity-based awards.
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Item 5. Non-Binding Vote to Approve Named Executive Officer Compensation (“Say-On-Pay”)
In accordance with the requirements of Section 14A of the Exchange Act and the related rules of the SEC, we are including in these proxy materials a separate resolution subject to shareholder vote to approve, in a non-binding advisory vote, the compensation of our named executive officers as disclosed above. The text of the resolution in respect of Proposal 5 is as follows:
“RESOLVED, that the compensation paid to the Company’s named executive officers as disclosed in this Proxy Statement pursuant to the rules of the SEC, including the Compensation Discussion and Analysis, compensation tables, and any related narrative discussion, is hereby APPROVED.”
In considering their vote, shareholders may wish to review with care the information on our compensation policies and decisions regarding the named executive officers presented in the Compensation Discussion and Analysis set forth below.
In particular, shareholders should note that we base our executive compensation decisions on the following:
•placing a strong emphasis on financial performance, with the flexibility to also assess against key initiatives and individual performance;
•an appropriate link between compensation and the creation of shareholder value through equity awards; and
•long-term incentive awards that do not promote excessive risk taking.
While the results of the vote are non-binding and advisory in nature, the Board intends to carefully consider the results of the vote. The next non-binding vote to approve the compensation of our named executive officers is expected to be held at the Company’s 2024 Annual Meeting of Shareholders.
BOARD RECOMMENDATION
The Board recommends a vote “FOR” the approval of the compensation of our named executive officers. | ||
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Compensation Discussion and Analysis
CD&A AT-A-GLANCE
NAMED EXECUTIVE OFFICERS
For the year ended December 31, 2022, our “named executive officers” or “NEOs” were:
•William E. Conway, Jr. (Former Interim Chief Executive Officer)
•Curtis L. Buser (Chief Financial Officer and Principal Financial Officer)
•Christopher Finn (Chief Operating Officer)
•Bruce Larson (Chief Human Resources Officer)
•Peter J. Clare (Former Chief Investment Officer for Corporate Private Equity and Chairman of Americas Private Equity)
•Kewsong Lee (Former Chief Executive Officer)
Mr. Lee’s service as our Chief Executive Officer ended on August 7, 2022, as described further below under “Former Chief Executive Officer Separation,” at which time Mr. Conway commenced his service as our Interim Chief Executive Officer. Mr. Conway continued to serve in this role until February 15, 2023, at which time Harvey M. Schwartz commenced service as Chief Executive Officer and a member of the Board and Mr. Conway ceased serving as Interim Chief Executive Officer. Because Mr. Schwartz did not commence service as Chief Executive Officer until 2023, he is not a named executive officer for the year ended December 31, 2022, but the material elements of his compensation arrangements are summarized below under “Appointment of New Chief Executive Officer.”
On February 27, 2023, we announced that Peter Clare, our Former Chief Investment Officer for Corporate Private Equity and Chairman of Americas Private Equity, will retire from Carlyle effective April 30, 2023. While Mr. Clare will assist in the transition of his responsibilities through the retirement date, he ceased to be an executive officer and a member of the Board effective as of February 27, 2023.
| CD&A HIGHLIGHTS | |||||||||||||||||||||||
| COMPENSATION PHILOSOPHY | COMPENSATION DECISION-MAKING PROCESS | COMPENSATION ELEMENTS | LEADERSHIP TRANSITIONS | COMPENSATION GOVERNANCE PRACTICES | |||||||||||||||||||
| Page | |||||||||||||||||||||||
| Section Highlights | Compensation Objectives | Compensation Decisions Compensation Consultants Review of Reference Companies | Overview of Elements Base Salary Annual Cash Performance Awards Long-Term Equity Awards Other 2022 Compensation Opportunities (Including Carried Interest) | Appointment of New Chief Executive Officer Retirement of Former Chief Investment Officer For Corporate Private Equity and Chairman of Americas Private Equity Former Chief Executive Officer Separation | Policy Against Hedging and General Prohibition Against Pledging Clawback Policy Executive Stock Ownership Guidelines Perquisites Tax and Accounting Considerations | ||||||||||||||||||
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COMPENSATION HIGHLIGHTS
WHAT WE DO: | WHAT WE DO NOT DO: | ||||||||||||||||
| Align pay with firmwide performance, including through use of time-vesting and performance-vesting RSUs Large majority of compensation is variable, and the majority is delivered in equity Long-term incentive awards are denominated and settled in equity Prohibit short sales and derivative transactions in our equity and hedging of our stock and generally prohibit pledging of our stock Regularly engage with current and potential shareholders Engage an independent compensation consultant that works directly for our Compensation Committee and does no work for management Tie incentive compensation to a clawback policy that covers financial restatements Require our executive officers to own a minimum value of shares of our common stock and retain a portion of certain RSU awards for a fixed minimum period following vesting Hold an annual Say-on-Pay vote Perform an annual compensation risk assessment Require achievement of rigorous stock price targets for our new CEO’s stock price and TSR-based RSU award, and require performance at the 60th percentile of relative TSR in order to receive the target payout for 40% of such award (and provide for forfeiture of such portions of such award for performance below the 50th percentile) For new equity incentive awards granted since 2022, require a qualifying termination of employment following a change in control of Carlyle in order for any such change in control to trigger accelerated vesting rights | No excise tax “gross-up” payments in the event of a change in control No tax “gross-up” payment in perquisites for named executive officers No dividends paid in cash on unvested equity awards | ||||||||||||||||
ALIGNMENT
As a result of our performance in 2022, our applicable incentive awards paid out as follows:
| ANNUAL CASH BONUS AWARD* | LONG-TERM EQUITY AWARDS* | |||||||||||||||||||||||||
 | PERFORMANCE BONUS | PERFORMANCE-VESTING RSUs Including Fifth Installment of Former CEO 2018-2022 Performance-Vesting RSUs | PERFORMANCE-VESTING RSUs ALIGNED WITH STRATEGIC PLAN Second Installment | |||||||||||||||||||||||
 | Assessment of Carlyle performance and individual contributions | FRE NRPR FEAUM Raised | FRE Adjusted FRE for the Global Private Equity segment (Mr. Clare only) | |||||||||||||||||||||||
 | $1.75M | 60.8% | Target achieved | |||||||||||||||||||||||
* Mr. Conway did not receive a performance bonus for 2022 and does not have any RSUs (including one-year performance-vesting RSUs or performance-vesting RSUs aligned with the strategic plan). Mr. Clare did not receive one-year performance-vesting RSUs in respect of 2022. Amounts related to direct carried interest allocations at the fund level are excluded from this summary. For more information about carried interest, see “Compensation Elements—Other 2022 Compensation Opportunities—Carried Interest and Incentive Fees”
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SAY-ON-PAY RESULTS
| SAY-ON-PAY | With respect to our 2022 non-binding, advisory say-on-pay vote, over 82% of our shareholders approved the compensation of our named executive officers as described in our Proxy Statement for our 2022 Annual Meeting of Shareholders. Based on this level of support, the Compensation Committee determined that shareholders generally support our pay practices and the named executive officers’ compensation levels. Accordingly, our approach to executive compensation for fiscal 2022 remained generally consistent with past practice. | ||||
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COMPENSATION PHILOSOPHY
Our business as a global investment firm is dependent on the services of our executive officers and other key employees. We rely on our executive officers to set the strategy for our business and to allocate resources to manage our complex global operations. This focus on allocation and management of our resources was particularly critical during 2022 as we worked through the transition of our former CEO, Mr. Lee, to our Interim CEO, Mr. Conway, and prepared to hire our new permanent CEO, Mr. Schwartz. We depend on our people’s ability to find, select and execute investments, oversee and improve portfolio company operations to create value for our investors, find and develop relationships with fund investors and other sources of capital and provide other services that are essential to our success by supporting our investment teams, LP Relations group and the corporate infrastructure of our firm. Therefore, it is important that our named executive officers and other key employees are compensated in a manner that motivates them to excel and encourages them to remain with our firm.
Our compensation policy has three primary objectives:
1 Establish a clear relationship between performance and compensation | 2 Align short-term and long-term incentives with our shareholders and fund investors | 3 Provide competitive incentive opportunities, with an appropriate balance between short-term and long-term incentives | ||||||
We seek to incentivize our named executive officers and other key employees to work to achieve the firm’s goals and objectives and to execute our strategic plan through our compensation policy. We believe that the key to achieving our goals and objectives is an organized, unbiased approach to compensation that is well understood and responsive to changes in the economy and industry.
Alignment is a central tenet that underlies our compensation programs. We believe that the significant equity ownership of our named executive officers and other key employees, as well as certain performance elements of certain of our named executive officers’ compensation, results in the alignment of their interests with those of our shareholders. In addition, to further drive alignment with our business, our senior Carlyle professionals (including our named executive officers) and other key employees invest a significant amount of their own capital in or alongside the funds we advise. Certain of these individuals also may be allocated a portion of the carried interest or incentive fees payable in respect of our investment funds. We believe that this approach of seeking to align the interests of our named executive officers and other key employees with the interests of both our shareholders and the investors in our funds has been a key contributor to our strong performance and growth.
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COMPENSATION DECISION-MAKING PROCESS
COMPENSATION DECISIONS
Our Compensation Committee establishes and reviews our general compensation philosophy, and reviews and approves awards under (or delegates such approval authority) and oversees the administration of The Carlyle Group Inc. Amended and Restated 2012 Equity Incentive Plan (the “Equity Incentive Plan”)
Beginning in April 2022, following the completion of our transition to becoming a non-controlled company, our Compensation Committee also became responsible for reviewing and approving compensation for all of our executive officers (including our named executive officers), including determining their allocations of carried interest and carried interest pool (as applicable). Prior to April 2022, our Compensation Committee formally approved the compensation arrangements only for our former Chief Executive Officer, Mr. Lee, and Mr. Lee reviewed and approved compensation for our other executive officers and determined their allocations of carried interest and carried interest pool. However, the Compensation Committee still established and reviewed the general compensation philosophy for the Company and had input on the compensation of our non-Chief Executive Officer named executive officers.
COMPENSATION CONSULTANTS
Pay Governance has been engaged by the Compensation Committee to serve as compensation consultant. In 2022, Pay Governance provided comparative market compensation data in order to provide a general understanding of current compensation practices, information on best practices and trends and modeling of various alternative compensation structures.
Frederic W. Cook & Co., Inc. was engaged by management in 2021 and assisted management in formulating executive compensation recommendations in 2022, but is no longer engaged by management. The Compensation Committee has separately engaged Pay Governance as its independent compensation consultant to provide it with independent advice and to avoid any conflicts of interest.
REVIEW OF REFERENCE COMPANIES
In 2022, Pay Governance provided the Compensation Committee with historical compensation data from the following companies as a reference point in connection with the Compensation Committee’s evaluation of the compensation of our former CEO, Mr. Lee:
•Affiliated Managers Group, Inc.
•Apollo Global Management, Inc.
•BlackRock Inc.
•Blackstone Inc.
•Evercore, Inc.
•Invesco Ltd.
•Jefferies Financial Group Inc.
•KKR & Co. Inc.
•Lazard Ltd.
•State Street Corporation
•T. Rowe Price Group, Inc.
COMPENSATION ELEMENTS
The primary elements of our compensation program for our named executive officers are base salary, annual cash bonuses and long-term incentives, including the ownership of restricted stock units (“RSUs”) and, for certain of our named executive officers, carried interest and carried interest pool. Certain of our named executive officers also had
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continuing interests in our legacy equity pool or legacy key executive incentive plan (“KEIP”) programs during 2022, although, as discussed below, our legacy equity pool was terminated during 2022 with a final distribution made to eligible participants, and following Mr. Lee’s departure, none of our other named executive officers are participants in the KEIP. Mr. Conway only received a base salary of $500,000 in respect of his service as Interim CEO during 2022. We periodically review the compensation of our key employees, including our named executive officers, and, from time to time, we may implement new plans or programs or otherwise make changes to the compensation structure relating to current or future key employees, including our named executive officers.
OVERVIEW OF ELEMENTS
| Compensation Element | Description | Purpose and Alignment | ||||||||||||
| Cash | ||||||||||||||
BASE SALARY | Fixed salary paid bi-weekly to our executives | Provides a base compensation floor, but is not intended to be a significant element of compensation for our executives | ||||||||||||
CASH BONUS FOR MESSRS. BUSER, CLARE, FINN AND LARSON | Annual bonus paid in cash and determined based on overall firm, investment fund and individual performance | Rewards achievement of key strategic and financial priorities and goals | ||||||||||||
| Long Term Incentives | ||||||||||||||
TIME-VESTING RESTRICTED STOCK UNITS | Time-vesting RSU awards for Messrs. Buser, Finn and Larson that are eligible to vest over 3.5 years. | Align interests of our executives with those of our shareholders, promote share ownership for our leadership team and promote retention since in most cases shares are forfeited if the executive leaves before vesting | ||||||||||||
PERFORMANCE-VESTING RESTRICTED STOCK UNITS | Performance-vesting RSU awards for Messrs. Buser, Clare, Finn, Larson and Lee that vest based on achievement of one or more financial performance metrics (FRE, NRPR, FEAUM Raised and Adjusted FRE for the Global Private Equity segment), with certain of such awards eligible to vest at threshold (50%), target (100%) or maximum (200%) based on achievement, and with the payout of certain of such awards capped at 150% if certain stock price conditions are not satisfied. | Drive executive performance to create value for our shareholders by providing a significant at-risk compensation element and aligning our executives’ interest with those of our shareholders | ||||||||||||
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BASE SALARY
In 2022 and following a review of our base salaries, we approved an increase to the base salary for our named executive officers, in each case, effective as of January 1, 2022, at the annual rates shown below, which we believe reflects an appropriate rebalancing of compensation to provide more predictable cash flow for our named executive officers during the year, while still leaving a significant portion of our named executive officer’s compensation as variable, at-risk compensation contingent upon performance:
| Name | Prior Base Salary | 2022 Base Salary | ||||||||||||
| William E. Conway, Jr. | $ | 275,000 | $ | 500,000 | ||||||||||
| Curtis Buser | $ | 275,000 | $ | 500,000 | ||||||||||
| Peter Clare | $ | 275,000 | $ | 500,000 | ||||||||||
| Christopher Finn | $ | 275,000 | $ | 500,000 | ||||||||||
| Bruce Larson | $ | 275,000 | $ | 500,000 | ||||||||||
| Kewsong Lee | $ | 275,000 | $ | 1,000,000 | ||||||||||
ANNUAL CASH PERFORMANCE AWARDS
NAMED EXECUTIVE OFFICER PERFORMANCE BONUSES
For 2022, Messrs. Buser, Clare, Finn and Larson were awarded discretionary bonuses that were determined and approved by our Compensation Committee. These discretionary bonuses were paid in cash, although the Compensation Committee may determine to pay a portion of aggregate bonus amounts in RSUs in future years. Mr. Conway did not receive a discretionary cash bonus for his service in 2022. As described in further detail below under “Executive Compensation Tables—Potential Payments Upon Termination or Change in Control—Former Chief Executive Officer,” in connection with Mr. Lee’s termination of employment in August 2022, Mr. Lee received a prorated portion of his formulaic dividend-based bonus commensurate with his service period for a portion of 2022 and did not receive any payment in respect of his performance-based incentive bonus for 2022.
The subjective factors that contributed to the determination of the bonus amounts to Messrs. Buser, Clare, Finn and Larson included an assessment of the performance of Carlyle and our investment funds, including:
•Growing FRE to $834 million in 2022, up 40% from 2021, and increasing FRE Margin to 37% in 2022 from 33% in 2021;
•Reaching a record $373 billion in assets under management (“AUM”), a 24% increase from 2021, driven by capital formation through the completion of our strategic transactions with Fortitude and CBAM;
•Fundraising of nearly $30 billion;
•Producing Distributable Earnings (“DE”) per share of $4.34, reflecting $1.0 billion in realized net performance revenues during 2022;
•Driving investment fund performance to create value for our fund investors despite a challenging market backdrop, as reflected in 11% appreciation in our carry fund portfolio during 2022 compared to double digit declines in public equity indices;
•Investing a record $35 billion in our carry funds, issuing $3.9 billion in new CLOs - making us one of the most active issuers in 2022, and originating a record $3.9 billion in our Direct Lending strategy;
•Growing our Global Credit segment into our largest source of Fee-earning AUM by year-end, with $121 billion, up 134% from 2021;
•Providing stability, transparency and enhanced communication to our people during our leadership transition;
•Expanding our ESG efforts, including by completing additional ESG-linked financings for us and our portfolio companies. which now aggregate to over $23 billion cumulatively, and further growing our ESG Data Convergence Project, which now has over 250 GP and LP participants;
•Further increasing our focus on diversity, equity and inclusion initiatives, which resulted in a 27% increase in the number of nominations year over year for our Diversity, Equity and Inclusion Incentive Awards, and a 68% year over year increase in membership in our Employee Resources Groups; and
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•Creating opportunities for our teams to get together and strengthen our culture in the hybrid work environment, including our newly-developed, quarterly Carlyle Live events, our New Hire program, and our Succeeding in a Hybrid Workplace class.
Our Compensation Committee determined that each of Messrs. Buser, Clare, Finn and Larson provided critical and significant contributions to Carlyle’s achievements in 2022, including in providing continuity of leadership following the departure of Mr. Lee as our Chief Executive Officer. In addition to such contributions and the firmwide achievements discussed above, our Compensation Committee considered the following individual achievements of Messrs. Buser, Clare, Finn and Larson, resulting in the following annual cash bonus awards:
| Name | Performance Considerations | 2022 Bonus | ||||||||||||
| Curtis Buser | In assessing Mr. Buser’s performance, we considered his oversight of our accounting, finance and treasury functions, his leadership during the Chief Executive Officer transition, his role in executing our strategic transactions, as well as his management of our balance sheet and focus on managing costs. | $ | 1,750,000 | |||||||||||
| Peter Clare | In assessing Mr. Clare’s performance, we considered his leadership in driving investment fund performance to create value for our fund investors in his roles as Chief Investment Officer for Corporate Private Equity and Chairman of Americas Private Equity, as well as his leadership during the Chief Executive Officer transition. | $ | 1,750,000 | |||||||||||
| Christopher Finn | In assessing Mr. Finn’s performance, we considered his leadership and oversight of our operations across the firm’s global platform, his leadership during the Chief Executive Officer transition and his role in working to create greater scalability and efficiency in the firm’s processes and operations, particularly in light of our organic and inorganic growth during the year. | $ | 1,750,000 | |||||||||||
| Bruce Larson | In assessing Mr. Larson’s performance, we considered his leadership and oversight of succession planning, talent management, training and development and compensation across our global employee base, his leadership and enhanced communications to our employees during the firm’s Chief Executive Officer transition, as well as his continuing commitment to furthering our DEI objectives. | $ | 1,750,000 | |||||||||||
LONG-TERM EQUITY AWARDS
The following sets forth a summary of the RSU awards to Messrs. Buser, Finn and Larson during 2022 (in respect of 2021 performance) and 2023 (in respect of 2022 performance), as well as the performance-based RSU award granted to Mr. Lee in 2022. The treatment of Mr. Lee’s other outstanding equity awards in connection with the termination of his employment are discussed below under “Executive Compensation Tables—Potential Payments Upon Termination or Change in Control—Former Chief Executive Officer.” Mr. Clare did not receive any RSU awards during 2022, and has not received any RSU awards during 2023. Mr. Conway has not been awarded any RSUs (in respect of 2022 performance or otherwise).
2022 RSU GRANTS (2021 PERFORMANCE)
As part of our 2021 year-end compensation program, on February 1, 2022, we awarded discretionary time-vesting RSU grants and on February 8, 2022 we awarded performance-vesting RSU grants to each of Messrs. Buser, Finn and Larson based on their 2021 performance, leadership, overall responsibilities and expected future contribution to the firm’s success. The grant date fair value of these awards is reflected as stock awards for 2022 in the Summary Compensation Table and in the Grants of Plan-Based Awards in 2022 table.
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GRANTS OF 2022 RSUs (2021 PERFORMANCE)
| Name | Performance Considerations | Target Value of Time-Vesting RSUs | Target Value of Performance-Vesting RSUs | ||||||||||||||
| Curtis Buser | Mr. Buser received his grants due to his oversight of our accounting, finance and treasury functions, his leadership role in continuing our business in a remote and hybrid work environment and guiding our policies regarding reopening our global offices, as well as his management of our balance sheet and focus on managing costs. | $ | 1,750,000 | $ | 1,750,000 | ||||||||||||
| Christopher Finn | Mr. Finn received his grant due to his leadership and oversight of our operations across the firm’s global platform, his leadership role in transitioning our business to a hybrid work environment and guiding our policies regarding reopening our global offices, as well as his role in working to streamline and enhance the efficiency of the firm’s processes and operations. | $ | 1,750,000 | $ | 1,750,000 | ||||||||||||
| Bruce Larson | Mr. Larson received his grant due to his leadership and oversight of our succession planning, talent management, training and development and compensation for the employees of the firm, as well as his continuing commitment to furthering our DEI objectives. | $ | 1,750,000 | $ | 1,750,000 | ||||||||||||
2022 TIME-VESTING RSUs
| Grant Date | February 1, 2022 | ||||
| Terms | The time-vesting RSUs will be eligible to vest 40% on August 1, 2023, 30% on August 1, 2024 and 30% on August 1, 2025, subject to the applicable named executive officer’s continued employment through each applicable vesting date. | ||||
2022 PERFORMANCE-VESTING RSUs
| Grant Date | February 8, 2022 | ||||
| Terms | The performance-vesting RSUs were eligible to vest, subject to the applicable named executive officer’s continued employment through the vesting date, based on the achievement of specified performance metrics that were set in February 2022, as described below. Each applicable named executive officer had the opportunity to earn between 0% and 200% of the target amount of the performance-vesting RSUs based on the level of achievement of such specified performance metrics, as described below, subject to a cap of 150% if the volume weighted average price of the Company’s common stock over the 30 consecutive trading-day period ending on the last day of the applicable performance period was less than or equal to the volume weighted average price of the Company’s common stock for the 30 consecutive trading-day period ending on the date on which the underlying performance goals for such performance period were approved, which is referred to herein as the “Share Price Governor.” | ||||
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The performance metrics for the 2022 Performance-Vesting RSUs were as follows:
| Performance Metrics | Weighting | How Goals are Calculated | ||||||
| Fee Related Earnings (“FRE”) | 50% | FRE is described under “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Key Financial Measures—Non-GAAP Financial Measures—Fee Related Earnings” in our Annual Report on Form 10-K. | ||||||
| Net Realized Performance Revenues (“NRPR”) | 25% | NRPR is described under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K. | ||||||
| Fee-Earning Assets Under Management Raised (“FEAUM Raised”) | 25% | FEAUM Raised represents fee earning capital raised from limited partners and excludes capital commitments made by the firm or through our internal coinvestment program. | ||||||
When assessing performance against the applicable performance period’s performance targets, we reserve the ability to adjust the actual fiscal year results to exclude the effects of extraordinary, unusual or infrequently occurring events. We exercised this discretion to adjust the actual fiscal year results for FRE and NRPR for purposes of the 2022 Performance-Vesting RSUs. Actual FRE results were adjusted down by $100 million to $734.3 million, primarily due to our strategic transactions in 2022 and certain fee-related performance revenues. Actual NRPR results were adjusted up by $20 million to $1.018 billion in a corresponding adjustment relating to such fee-related performance revenues.
The achievement factor for each of the fiscal 2022 performance metrics was determined by multiplying the weight attributed to each performance metric by the applicable payout percentage for each metric. The payout percentages were determined by calculating actual achievement against the target amount based on a pre-established scale. Payout percentages for actual performance between the specified threshold levels and target, and between the specified target and the maximum levels, was determined on a linear basis.
The weighted achievement factors for each performance metric resulted in a cumulative final weighted achievement factor at 60.8% of target, which resulted in Messrs. Buser, Finn and Larson earning 19,384 shares of common stock following certification of the attainment of the applicable performance metrics on February 7, 2023. The grant date fair value of these awards is reflected for 2022 in the Summary Compensation Table and in the Grants of Plan-Based Awards in 2022 table.
| Goal | Weight | Performance Required | % Earned | Weighted Payout | |||||||||||||||||||||||||||||||
Threshold (50% of Target Payout) | Target (100% of Target Payout) | Maximum (200%* of Target Payout) | |||||||||||||||||||||||||||||||||
| FRE | 50% |  | 84.4% | 42.2% | |||||||||||||||||||||||||||||||
| NRPR | 25% |  | 74.5% | 18.6% | |||||||||||||||||||||||||||||||
| FEAUM Raised | 25% |  | 0% | 0% | |||||||||||||||||||||||||||||||
| Final Weighted Achievement Factor: | 60.8% | ||||||||||||||||||||||||||||||||||
| Number of Shares Delivered to Messrs. Buser, Finn and Larson: | 19,384 | ||||||||||||||||||||||||||||||||||
* 150% if the Share Price Governor was not satisfied for 2022, which it was not.
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2022 PERFORMANCE-BASED STOCK PRICE TARGET AWARD
In February 2022, Mr. Lee was granted a performance-based award of 605,528 RSUs that were eligible to vest in February 2027, generally subject to Mr. Lee’s continued employment through the vesting date, based on the attainment of 20-consecutive trading day average closing stock prices over the performance period from February 10, 2022 to December 31, 2026. These RSUs were eligible to vest at the 20%, 40%, 60%, 80% or 100% level based on the attainment of 20-consecutive trading day average closing stock prices equal to or in excess of $59.21, $69.08, $78.94, $88.81 and $98.68, respectively. Pursuant to the terms of the Separation Agreement and the applicable award agreement, these RSUs were forfeited in their entirety in connection with Mr. Lee’s separation on August 7, 2022, and no shares of common stock were earned.
2023 RSU GRANTS (2022 PERFORMANCE) - OTHER NAMED EXECUTIVE OFFICERS
As part of our 2022 year-end compensation program, in February 2023, we awarded discretionary RSU grants to Messrs. Buser, Finn and Larson based on their 2022 performance, leadership, overall responsibilities and expected future contribution to the firm’s success. The grants consist of both time-vesting RSUs and performance-vesting RSUs. The grant date fair value of these awards will be reflected as stock awards for 2023 in the Summary Compensation Table and in the Grants of Plan-Based Awards in 2023 table in our Proxy Statement for our 2024 Annual Meeting of Shareholders.
GRANTS OF 2023 RSUs (2022 PERFORMANCE)
| Name | Performance Considerations | Target Value of Time-Vesting RSUs | Target Value of Performance-Vesting RSUs | ||||||||||||||
| Curtis Buser | In assessing Mr. Buser’s performance, we considered his oversight of our accounting, finance and treasury functions, his leadership during our Chief Executive Officer transition, his role in executing our strategic transactions, as well as his management of our balance sheet and focus on costs. | $ | 3,000,000 | $ | 1,750,000 | ||||||||||||
| Christopher Finn | In assessing Mr. Finn’s performance, we considered his leadership and oversight of our operations across the firm’s global platform, his leadership during the Chief Executive Officer transition and his role in working to create greater scalability and efficiency in the firm’s processes and operations, particularly in light of our organic and inorganic growth during the year. | $ | 3,000,000 | $ | 1,750,000 | ||||||||||||
| Bruce Larson | In assessing Mr. Larson’s performance, we considered his leadership and oversight of succession planning, talent management, training and development and compensation across our global employee base, his leadership and enhanced communications to our employees during the firm’s Chief Executive Officer transition, as well as his continuing commitment to furthering our DEI objectives. | $ | 3,000,000 | $ | 1,750,000 | ||||||||||||
2023 TIME-VESTING RSUs
| GRANT DATE | February 1, 2023 | ||||
| Terms | These time-vesting RSUs are eligible to vest 40% on August 1, 2024, 30% on August 1, 2025 and 30% on August 1, 2026, subject to the applicable named executive officer’s continued employment through the applicable vesting date. | ||||
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2023 PERFORMANCE-VESTING RSUs
| GRANT DATE | February 7, 2023 | ||||
| Terms | On February 7, 2023, we established the performance goals for the 2023 Performance-Vesting RSUs for the fiscal 2023 performance period. The performance metrics for the fiscal 2023 performance period are based on the level of achievement against established FRE, NRPR, and FEAUM Raised targets. Of the total target number of performance RSUs awarded for the fiscal 2023 performance period, 50% will be eligible to vest subject to achievement against the FRE target, 25% will be eligible to vest subject to achievement against the NRPR target and 25% will be eligible to vest subject to achievement against the FEAUM Raised target. Similar to the 2022 Performance-Vesting RSUs described above, the maximum payout percentage for the 2023 Performance-Vesting RSUs will be capped at 150% if the Share Price Governor is not satisfied. | ||||
PERFORMANCE-BASED RSUs ALIGNED TO STRATEGIC PLAN
The second tranche of the Strategic Equity performance-vesting RSUs granted to each of our named executive officers other than Mr. Conway in February 2021 had performance goals tied to Carlyle’s performance during the 2022 performance year (with such goals being tied to, for the awards to Messrs. Buser, Finn, Larson and Lee, Company FRE performance, and for the award to Mr. Clare, both Company FRE performance (relating to 25% of such award) and adjusted FRE performance for the Company’s Global Private Equity segment (relating to 75% of such award)).
On February 7, 2023, following certification that the FRE target of $500 million for the 2022 performance year was achieved and, with respect to Mr. Clare, that the Global Private Equity segment’s adjusted FRE target for the 2022 performance year of $254 million was achieved, 20% of the performance-based strategic equity awards granted to our applicable named executive officers vested, resulting in the delivery of 23,201, 92,804, 23,201 and 23,201 shares of common stock to Messrs. Buser, Clare, Finn and Larson, respectively. 25% of such shares must generally be retained by the applicable named executive officers until the earlier of (i) the first anniversary following the recipient’s termination of employment or (ii) February 2030. The treatment of Mr. Lee’s Strategic Equity performance-vesting RSUs in connection with the termination of his employment are described below under “Executive Compensation Tables—Potential Payments Upon Termination or Change in Control—Former Chief Executive Officer.”
| Goal | Performance Required | Earned | ||||||||||||
Target (100% of Target Payout) | ||||||||||||||
| FRE* |  | Achieved | ||||||||||||
| Adjusted FRE for Global Private Equity Segment (Mr. Clare only)* |  | Achieved | ||||||||||||
* FRE is described under “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Key Financial Measures—Non-GAAP Financial Measures—Fee Related Earnings” in our Annual Report on Form 10-K. For purposes of Mr. Clare’s award, the Company’s Global Private Equity segment’s FRE is determined by reference to the Global Private Equity segment’s fee related earnings, excluding fee related earnings attributable to (i) certain GPE investment funds (Carlyle Power Partners, Europe Real Estate, Global Infrastructure and Carlyle Renewable and Sustainable Energy) and (ii) funds managed by NGP Energy Capital Management L.L.C., in each case taking into account segment related allocations and recoveries.
An additional 20% of the Strategic Equity performance-vesting RSUs will be eligible to vest in February 2024 based on performance results for the same metrics identified above for the 2023 performance year, and the final 40% of the Strategic Equity performance-vesting RSUs will be eligible to vest in February 2025 based on the performance results for such metrics for the 2024 performance year.
2023 ONE-TIME RSU AWARD PROGRAM
In February 2023 certain key personnel, including Messrs. Buser, Finn and Larson, received time-based RSU awards pursuant to a 2023 One-Time RSU Award Program in order to incentivize their continued retention, particularly as
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Carlyle undergoes a transition in leadership. Awards granted under this program to our applicable named executive officers are eligible to vest 40% on August 1, 2024, 30% on August 1, 2025 and 30% on August 1, 2026, subject to the applicable named executive officer’s continued employment through each applicable vesting date.
Awards granted under this program align the applicable named executive officers with our shareholders as 25% of any vested shares issued to recipients of these awards generally must be retained by them until the earlier of (i) the first anniversary following the recipient’s termination of employment or (ii) August 2027 (i.e., one year following the final vesting date of the award).
The grant date fair value of these awards will be reflected as stock awards for 2023 in the Summary Compensation Table and in the Grants of Plan-Based Awards in 2023 table in our Proxy Statement for our 2024 Annual Meeting of Shareholders.
OTHER 2022 COMPENSATION OPPORTUNITIES
CARRIED INTEREST AND INCENTIVE FEES
The general partners of our carry funds typically receive a special residual allocation of income, which we refer to as a carried interest, from our investment funds if investors in such funds achieve a specified threshold return. Similarly, the collateral managers of our structured credit funds are entitled to receive incentive fees from our credit funds if investors in such funds achieve a specified threshold return. While the Carlyle Holdings entities own controlling equity interests in these collateral managers and fund general partners, our senior Carlyle professionals and our other people who work in these operations directly own a portion of the carried interest in these entities or are allocated a portion of the incentive fees, in order to better align their interests with our own and with those of the investors in these funds. We generally seek to concentrate the direct ownership of carried interest in respect of each carry fund and the incentive fees in our structured credit funds among those of our professionals who directly work with that fund so as to align their interests with those of our fund investors and of our firm. Participation in carried interest and incentive fees is a significant element of compensation for many professionals in our industry, including amongst many of our competitors, and providing such participation to certain of our professionals is critical in order to retain and incentivize such professionals.
Messrs. Buser and Larson have not received any allocations of direct carried interest ownership or incentive fees at the fund level. Mr. Finn previously received allocations of direct carried interest ownership at the fund level in respect of certain corporate private equity funds but has not received such allocations for subsequent funds. Mr. Lee previously received allocations of direct carried interest and incentive fees, as applicable, at the fund level in respect of certain global credit and corporate private equity funds.
In his roles as Chief Investment Officer for Corporate Private Equity and Chairman of Americas Private Equity and Chair of the U.S. Buyout and Growth investment committees, Mr. Clare received allocations of direct carried interest ownership at the fund level in respect of certain of our U.S. Buyout and Growth investment funds. We made these allocations in consideration of Mr. Clare’s extensive expertise in the management of our Corporate Private Equity investment funds and because we believe that allocations of direct carried interest ownership to our investment professionals benefits our investment funds and our investors by aligning a significant component of compensation with the strong performance of such investment funds. In addition, in 2022 the Compensation Committee determined to pay Mr. Clare a certain amount, representing a portion of the carried interest generated by our Carlyle Partners VI investment fund in consideration of Mr. Clare’s services in overseeing the investments in Carlyle Partners VI. As Mr. Clare will retire effective as of April 30, 2023, he will not receive any new allocations of direct carried interest ownership. The Compensation Committee would approve any new allocations of direct carried interest ownership to any of our other executive officers.
Carried interest, if any, in respect of any particular investment, is only paid in cash (or, as discussed below, in fully vested shares of our common stock) when the underlying investment is realized and the applicable fund is in a position to distribute carried interest. To the extent any “giveback” obligation is triggered, carried interest previously distributed by the fund would need to be returned to such fund. Our professionals who receive direct allocations of carried interest at the fund level are personally subject to the “giveback” obligation, pursuant to which they may be required to repay carried interest previously distributed to them, thereby reducing the amount of cash received by such recipients for any such year. There is no “giveback” obligation with respect to incentive fees. Because the amount of carried interest and incentive fees payable is directly tied to the realized performance of the underlying investments within a fund, we believe this fosters a strong alignment of interests among the investors in those funds and the professionals who are allocated direct carried interest, which also indirectly benefits
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our shareholders. The percentage of carried interest owned at the fund level by individual professionals varies by year, by investment fund and, with respect to each carry fund, by investment. Ownership of carried interest by senior Carlyle professionals and other personnel at the fund level who are allocated carried interest is also subject to a range of vesting schedules. Vesting is tied to providing services over specified periods of time, which fosters retention and enhances the alignment of interests between our professionals who receive carried interest allocations, the firm and our fund investors.
In 2021, we adopted a new program, referred to as the Distributing a Portion of Realized Carry in Shares Program, that commenced in the fourth quarter of 2021 whereby, in Carlyle’s discretion, for our professionals who receive carried interest allocations, up to 20% of their realized proceeds per carried interest distribution after meeting a threshold amount may be distributed in new, fully vested shares of our common stock. This program was adopted with the intent of further fostering the alignment of our professionals who receive carried interest allocations, in particular our senior investment professionals, with our shareholders. In 2022, we distributed to Mr. Clare shares of our common stock in respect of a portion of his realized carried interest distributions in connection with this program. This program was paused in the third quarter of 2022.
CARRIED INTEREST POOL PROGRAM
In 2019, we implemented a program to provide certain employees with the opportunity to share in the potential future value of our investments made in a calendar year by certain investment funds across our global platform. The carried interest pool (“CIP”) is structured so that the applicable annual CIP receives a portion of any carried interest proceeds Carlyle earns from investments made during the applicable calendar year. On an annual basis, participants receive cash distributions equivalent to the CIP value (comprising distributions received by the pool in respect of investments made during the applicable year) multiplied by the participant’s allocation percentage for the respective annual CIP. The CIP allocations to our applicable named executive officers are subject to vesting schedules that are tied to providing services over specified periods of time. The CIP made its first distribution in 2022, resulting in cash distributions of $191,722 to each of Messrs. Buser and Finn and $63,907 to Mr. Larson. We anticipate that distributions from the annual carried interest pools will increase in the coming years, in particular for participants who receive allocations in successive annual carried interest pools. Of our named executive officers, we currently anticipate that only Messrs. Buser, Finn and Larson will have allocations in the CIP program.
LEGACY EQUITY POOL PROGRAM
Prior to our initial public offering in 2012, we facilitated employees sharing in the future potential value of all our investment activities through our equity pool program, which gave participants equity pool units that represented an economic stake in all the investments made in that calendar year. The last equity pool was formed in 2011, prior to our IPO. The equity pool was structured so that in a given year, the equity pool receives a portion of any carried interest proceeds Carlyle earns from all investments made during the respective calendar year. On a semi-annual basis, participants received cash distributions equivalent to the equity pool unit value times their number of equity pool units. Messrs. Buser, Clare, and Finn previously received equity pool units. This program was terminated in the fourth quarter of 2022, and final distributions were made to Messrs. Buser and Finn in 2022 in connection therewith. Mr. Buser received $125,928 in respect of his equity pool units in 2022 and Mr. Finn received $434. Messrs. Conway, Larson and Lee did not have an interest in the equity pool.
LEGACY KEY EXECUTIVE INCENTIVE PROGRAM (KEIP)
In March 2014, we adopted a methodology for determining potential future equity awards to certain key executives under the Equity Incentive Plan. The KEIP was intended to be an incentive to participants to align their economic interests with those of our fund investors and our shareholders, as well as with Carlyle’s overall performance. Under the terms of the KEIP, for each applicable calendar year, we calculated the number of RSUs to be issued to the participating executives based on the carried interest generated by the investment pool composed of the portfolio investments acquired during the calendar year by any of our carry funds. On a semi-annual basis, based on the amount of carried interest distributed during that period (less any funds escrowed to secure giveback obligations during that period) in the investment pool and the participating executive’s participation percentage, we calculated a number of RSUs to be granted to such executive for the period by reference to the executive’s interest in the investment pool for the period divided by the fair market value of our common stock on the relevant grant date. The grant of such RSUs was made on November 1 of each year for carry distributed during the first and second quarters of the calendar year and on May 1 of the following year for carry distributed during the third and fourth quarters of the calendar year, subject in each case to a minimum grant threshold value of $100,000 for each six-month period. Each KEIP RSU grant vested six months from the grant date.
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Mr. Lee received participation percentages in the KEIP for 2015 and 2016. We have not allocated any participation percentages in the KEIP since 2016 and we do not currently anticipate that we will allocate any additional participation percentages in future years. We granted 9,695 RSUs in respect of the KEIP to Mr. Lee in May 2022 with a value equivalent to $351,832, which represented his accrued but unpaid KEIP distributions in the 2015 and 2016 KEIP as of December 31, 2021, which vested on November 1, 2022.
LEADERSHIP TRANSITIONS
APPOINTMENT OF NEW CHIEF EXECUTIVE OFFICER
On February 5, 2023, our Board approved the compensation arrangements with Mr. Schwartz following recommendation of the Compensation Committee, and we entered into an Employment Agreement with Mr. Schwartz. On February 15, 2023, Mr. Schwartz commenced his service as CEO and as a member of the Board.
Pursuant to the terms of the Employment Agreement, Mr. Schwartz will receive an annual base salary at a rate of $1,000,000. Mr. Schwartz will be eligible to receive an annual bonus at a target amount of $3,000,000, with a maximum bonus opportunity equal to 200% of target.
On February 15, 2023, Mr. Schwartz also received a grant of 2,031,602 time-based restricted stock units (the “Time-Based RSU Award”) and a grant of 4,730,617 performance-based restricted stock units (the “Performance-Based RSU Award” and together with the Time-Based RSU Award, the “Schwartz Awards”). The Schwartz Awards were granted pursuant to the Nasdaq “inducement award” exception under Nasdaq Listing Rule 5635(c)(4). Although the Schwartz Awards were not granted pursuant to the Equity Incentive Plan, they are generally subject to the terms of the Equity Incentive Plan. The Schwartz Awards are intended to serve as Mr. Schwartz’s only equity award opportunity for his initial five years of employment with Carlyle. The grant date fair value of the Schwartz Awards will be reflected as a stock award for 2023 in the Summary Compensation Table and in the Grant of Plan-Based Awards in 2023 table in our Proxy Statement for our 2024 Annual Meeting of Shareholders.
The number of RSUs issued under the Time-Based RSU Award was determined based on an intended value at grant of $72,000,000 divided by the closing price of the Company’s common stock on the date of grant. The Time-Based RSU Award will vest ratably in four installments and requires Mr. Schwartz’s continuous service through February 1 of each of 2024, 2025, 2026 and 2027, in each case, with settlement to occur in December of the prior year, subject to clawback if the service requirement is not met. The Time-Based RSU Award includes certain termination-related vesting provisions generally providing for acceleration of vesting of one tranche of the Time-Based RSU Award in the event of an involuntary termination of employment without cause or resignation for good reason (or full vesting of all remaining tranches if such termination or resignation occurs in certain change in control related circumstances).
The number of RSUs issued under the Performance-Based RSU Award was determined based on an intended value at grant of $108,000,000 divided by the per share accounting fair value of the Performance-Based RSU Award on the grant date. The Performance-Based RSU Award is eligible to vest in five equal tranches. Each tranche of the Performance-Based RSU Award is subject to a performance-based vesting condition that requires achievement of an absolute stock price hurdle of $42.74, $51.29, $58.12, $64.96 and $71.80, respectively, which represents 125%, 150%, 170%, 190% and 210%, respectively, of the starting share price of $34.19. The two tranches of the Performance-Based RSU Award tied to the achievement of average closing stock prices of $64.96 and $71.80 are also subject to an additional performance condition relating to total shareholder return (linked to the 60th percentile of the constituent companies in the S&P 500® Financials Index). In addition, each tranche is subject to time-based vesting conditions requiring minimum service periods of one year, two years, three years, four years, and five years, respectively. The period for measuring stock price performance begins on February 15, 2023 and ends on January 31, 2028, and any RSUs under the Performance-Based RSU Award that do not vest by February 1, 2028 will be forfeited for no consideration. The Performance-Based RSU Award includes certain termination-related vesting provisions generally providing for, in the event of an involuntary termination of employment without cause or resignation for good reason, full acceleration of vesting for previously earned tranches and certain additional prorated vesting if performance goals are achieved between the date of termination and the end of the performance period (or vesting without proration based on performance through the date of a change in control if such termination or resignation occurs in certain change in control related circumstances).
If any of the RSUs under the Schwartz Awards are outstanding and unvested on the record date for the payment of a cash dividend on our shares of common stock, then on the payment date of such cash dividend, the Time-Based
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RSU Award and the Performance-Based RSU Award will be increased by a number of additional dividend equivalent RSUs determined by multiplying the dollar amount of the cash dividend paid by the number of RSUs outstanding on the payment date for such dividend and dividing by the closing price for a share of our common stock on the payment date for such dividend. Any such additional dividend equivalent RSUs will be subject to the same terms and conditions as the RSUs under the Time-Based RSU Award and/or the Performance-Based RSU Award with respect to which they were credited.
Mr. Schwartz must retain 25% of the net after-tax shares delivered in respect of the Schwartz Awards until the first to occur of his termination of employment (including by reason of his death or disability) or a change in control of Carlyle.
In addition, pursuant to the terms of his Employment Agreement, if, as a result of his employment with Carlyle, Mr. Schwartz forfeits a cash long-term incentive award previously granted by his former employer and/or the right to make recommendations with respect to a donor-advised fund through an arrangement provided by his former employer, we have agreed to make him whole for these forfeitures by granting a new cash long-term incentive award equal to the forfeited amount (up to a maximum of $19.5 million) and/or funding a new donor-advised fund in the amount of the forfeiture (up to a maximum of $3.1 million).
In the event that we involuntarily terminate Mr. Schwartz’s employment without cause or he resigns for good reason outside of a change in control period, Mr. Schwartz will be entitled to receive a cash payment equal to 1.5 times the sum of base salary and target annual bonus, a prorated annual bonus payment (at target), healthcare subsidy for up to 18 months, vesting of the cash make-whole award (if granted and not yet paid) and retention of rights relating to the make-whole donor-advised fund (if provided), and treatment of the Schwartz Awards in accordance with the terms of the applicable award agreement (as summarized above).
If the involuntary termination without cause or resignation for good reason occurs during the two-year period following a change in control of the Company, or during the period in which a signed merger agreement relating to a change in control of the Company is in effect, Mr. Schwartz’s severance benefits would be the same as described immediately above, except that the cash severance payment described above would be increased to 2x the sum of base salary and target annual bonus and Mr. Schwartz would be entitled to more favorable vesting of the Schwartz Awards in accordance with the terms of the applicable award agreement (as summarized above).
Under the Employment Agreement, Mr. Schwartz is subject to employee and customer non-solicitation covenants and a non-competition covenant, in each case, during his employment and for a period of 12 months thereafter. The Employment Agreement also includes perpetual confidentiality and mutual non-disparagement covenants.
RETIREMENT OF FORMER CHIEF INVESTMENT OFFICER FOR CORPORATE PRIVATE EQUITY AND CHAIRMAN OF AMERICAS PRIVATE EQUITY
On February 27, 2023, we announced that Peter Clare, our Former Chief Investment Officer for Corporate Private Equity and Chairman of Americas Private Equity, will retire from Carlyle effective April 30, 2023. While Mr. Clare will assist in the transition of his responsibilities through the retirement date, he ceased to be an executive officer and a member of the Board effective as of February 27, 2023.
FORMER CHIEF EXECUTIVE OFFICER SEPARATION
On August 7, 2022, we mutually agreed with our former Chief Executive Officer, Mr. Lee, that Mr. Lee would step down as Chief Executive Officer and as a member of the Board. We entered into a Separation Agreement with Mr. Lee on August 7, 2022 (the “Separation Agreement”) providing for certain severance payments and the treatment of Mr. Lee’s outstanding equity awards, as described below under “Executive Compensation Tables—Potential Payments Upon Termination or Change in Control—Former Chief Executive Officer.”
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COMPENSATION GOVERNANCE PRACTICES
RISK MITIGATION
Our compensation program includes significant elements that discourage excessive risk taking and focuses the efforts of our employees on the long-term performance of the firm, which is also reflected in their compensation. For example, notwithstanding the fact that for accounting purposes we accrue compensation for performance allocations related to our carry funds upon appreciation of the valuation of our funds’ investments above certain specified threshold return hurdles, we only make cash payments to our employees related to carried interest when profitable investments have been realized and cash is distributed first to the investors in our funds, followed by the firm and only then to employees of the firm. Moreover, if a carry fund fails to achieve specified investment returns due to diminished performance of later investments, a “giveback” obligation may be triggered, whereby carried interest previously distributed by the fund would need to be returned to such fund. Our professionals who receive direct allocations of carried interest at the fund level are personally subject to the “giveback” obligation, pursuant to which they may be required to repay carried interest previously distributed to them, thereby reducing the amount of cash received by such recipients for any such year, which further discourages excessive risk-taking by our employees. Similarly, collateral managers of our structured credit funds are entitled to receive incentive fees from our credit funds that pay incentive fees only when the return on invested capital exceeds certain benchmark returns or other performance targets. In addition, our professional employees are eligible to, and frequently do choose to, invest their own capital in certain of the funds we manage, which directly aligns their interests with those of our fund investors. In many cases, these personal investments represent a significant portion of our employees’ after-tax compensation. These investments further encourage long-term thinking by directly aligning their interests to the long-term performance of our business.
HEDGING AND PLEDGING
Pursuant to the Company’s insider trading policies, all Company employees, including the named executive officers, and directors are prohibited from purchasing financial instruments (including prepaid variable forward contracts, equity swaps, collars, and exchange funds), or otherwise engaging in transactions, that hedge or offset, or are designed to hedge or offset, any decrease in the market value of registrant equity securities. In addition, all Company employees and directors are prohibited from taking “short” positions in Company securities. In addition, Company employees (including the named executive officers) may not pledge publicly traded Company securities or use such securities as collateral in connection with a loan or lending arrangement, or engage in any similar activity that could trigger an involuntary sale of such securities, in each case, without the prior written consent of the Company’s General Counsel or Global Chief Compliance Officer.
CLAWBACK POLICY
In 2021, the Compensation Committee adopted the Incentive Compensation Clawback Policy (the “Clawback Policy”) in order to ensure that incentive compensation is paid or awarded based on accurate financial results and the correct calculation of performance against incentive targets, and to create and maintain a culture that emphasizes integrity and accountability and reinforces our pay-for-performance compensation policy. Under the Clawback Policy, if the Compensation Committee determines that “incentive compensation” (which includes annual performance bonuses and time-based and performance-based long-term incentive awards, including cash, RSUs, stock options, stock appreciation rights, restricted stock, performance share units or other equity-based awards) of its current and former Section 16 officers or the heads of its business segments was overpaid, in whole or in part, as a result of a restatement of the reported financial results of the Company or any of its segments due to material non-compliance with financial reporting requirements (unless due to a change in accounting policy or applicable law), or due to such incentive compensation being calculated on the basis of inaccurate information, then the Compensation Committee will determine, in its discretion and as permitted by and consistent with applicable law, whether to seek to recover or cancel any overpayment of incentive compensation paid or awarded based on the inaccurate financial information or results that were later restated. The Clawback Policy also provides that if a covered person engages in any detrimental activity (as defined in the Clawback Policy) as determined by the Compensation Committee, the Compensation Committee may, in its sole discretion, provide for one or more of the following: (i) cancellation of any or all of such covered person’s incentive compensation (determined as set forth above, and including future incentive compensation); or (ii) forfeiture by the covered person of any gain realized on the vesting or exercise of awards, and prompt repayment of any such gain to us. The Compensation Committee may recoup amounts
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determined to be owed pursuant to the foregoing through all or any of (a) requiring reimbursement of amounts previously paid in cash, (b) seeking recovery or forfeiture of any gain realized on the vesting, exercise, settlement, sale, transfer or other disposition of any time-based or performance-based equity awards, (c) offsetting the recouped amount from any compensation otherwise owed to the covered individual, (d) cancelling outstanding vested or unvested time-based or performance-based equity awards or (e) taking any other remedial or recovery action permitted by law. We will update the Clawback Policy, as appropriate, to comply with regulations mandated under the Dodd-Frank Act when the applicable rules adopted by the SEC in October 2022 become effective.
EXECUTIVE STOCK OWNERSHIP GUIDELINES
In 2021, the Compensation Committee adopted Executive Stock Ownership Guidelines that apply to our executive officers. The Executive Stock Ownership Guidelines provide that our Chief Executive Officer must own stock with a value equal to the greater of (1) $6 million and (2) 6.0 times the Chief Executive Officer’s base salary. However, Mr. Schwartz agreed in his Employment Agreement to beneficially own shares of our common stock with a minimum aggregate value of $10,000,000 during the term of his employment. As a result, the current stock ownership guidelines for our executive officers is as follows:
| Ownership Requirement (greater of) | |||||||||||
| Value of Stock | Multiple of Annual Base Salary | ||||||||||
| Chief Executive Officer | $10 million | N/A | |||||||||
| Other Executive Officers | $2.5 million | 3x | |||||||||
For these purposes, we also count outstanding time-based restricted stock and restricted stock unit awards, deferred shares or units and shares or share equivalents held in our 401(k) plan or any other qualified or nonqualified savings, profit-sharing or deferred compensation accounts as shares being “owned” by the applicable individual. Our covered executive officers are expected to be in compliance with these guidelines within 5 years of becoming subject to the guideline with respect to their then-current office. Our covered executive officers are also expected to retain at least 50% of the number of shares received upon the vesting or settlement of any company equity incentive award (net of taxes) until the guideline is satisfied or, if the covered executive officer is not in compliance within the required 5-year period, 75% of the number of shares received upon the vesting or settlement of any company equity incentive award (net of taxes). The Compensation Committee has discretion to grant waivers or exceptions to these guidelines, including under circumstances of individual hardship. As of December 31, 2022, all of our covered executive officers were in compliance with our Executive Stock Ownership Guidelines.
PERQUISITES
Other than certain benefits provided to Mr. Lee in 2022, including personal use of a car service and a leased car (including related parking and automobile insurance expenses, and driver services provided by a Carlyle employee), during 2022 our named executive officers received no or minimal perquisites from the Company. For any perquisites our named executive officers do receive or may receive in the future, we do not provide tax gross up payments in respect of any such perquisites.
TAX AND ACCOUNTING CONSIDERATIONS
As one element of our review process, we consider the impact of accounting implications and tax treatment of significant compensation decisions. Section 162(m) of the Internal Revenue Code of 1986 (as amended, the “Code”) generally disallows publicly-listed companies from taking a tax deduction for compensation in excess of $1,000,000 paid to “covered employees,” which “covered employees” can include the chief executive officer, the chief financial officer, the three other highest paid executive officers and certain individuals who were previously “covered employees.” As accounting standards and applicable tax laws change and develop, it is possible that we may consider revising certain features of our executive compensation program to align with our overall compensation philosophy and objectives. However, we believe that these accounting and tax considerations are only one aspect of determining executive compensation, and should not unduly influence compensation program design elements that are consistent with our overall compensation philosophy and objectives. Accordingly, we retain the discretion to design and implement compensation elements and programs that may not be tax deductible and/or that could have adverse accounting consequences.
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Compensation Committee Report
Effective April 6, 2022, Mr. Conway no longer served on the Compensation Committee. In addition, effective April 6, 2022, Mr. Ordan and Mr. Rice were appointed to the Compensation Committee.
The current members of the Compensation Committee of the Board of Directors who are listed below have reviewed and discussed with management the foregoing Compensation Discussion and Analysis and, based on such review and discussion, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis should be included in this Proxy Statement.
Anthony Welters (Chair) Lawton W. Fitt Mark S. Ordan Derica Rice | |||||
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Executive Compensation Tables
SUMMARY COMPENSATION TABLE
The following table presents summary information concerning compensation of our named executive officers during the fiscal years indicated below. For our named executive officers who own direct carried interest allocations or allocations of incentive fees at the fund level or who participate in the equity pool program, we have reported in the “All Other Compensation” column amounts that reflect the actual cash distributions received by our named executive officers in respect of such allocations during the relevant year. The Principal Positions referenced below are as of January 1, 2023.
| Name and Principal Position | Year | Salary ($) | Cash Bonus ($) | Stock Awards ($)(1) | All Other Compensation ($) | Total ($) | |||||||||||||||||||||||||||||
| William E. Conway, Jr. | 2022 | 500,000 | — | — | — | 500,000 | |||||||||||||||||||||||||||||
| Interim Chief Executive Officer (principal executive officer) | |||||||||||||||||||||||||||||||||||
| Curtis L. Buser | 2022 | 500,000 | 1,750,000 | 3,108,697 | 317,650 | (2) | 5,676,347 | ||||||||||||||||||||||||||||
| Chief Financial Officer (principal financial officer) | 2021 | 275,000 | 2,750,000 | 11,149,577 | 54,384 | 14,228,961 | |||||||||||||||||||||||||||||
| 2020 | 275,000 | 2,500,000 | 3,965,860 | 30,847 | 6,771,707 | ||||||||||||||||||||||||||||||
| Peter J. Clare | 2022 | 500,000 | 1,750,000 | — | 36,559,512 | (3) | 38,809,512 | ||||||||||||||||||||||||||||
| Former Chief Investment Officer for Corporate Private Equity and Chairman of Americas Private Equity | 2021 | 275,000 | 3,000,000 | 14,058,878 | 58,738,149 | 76,072,027 | |||||||||||||||||||||||||||||
| 2020 | 275,000 | 2,750,000 | — | 7,028,785 | 10,053,785 | ||||||||||||||||||||||||||||||
| Christopher Finn | 2022 | 500,000 | 1,750,000 | 3,108,697 | 1,168,413 | (4) | 6,527,110 | ||||||||||||||||||||||||||||
| Chief Operating Officer | 2021 | 275,000 | 2,750,000 | 11,149,577 | 1,477,717 | 15,652,294 | |||||||||||||||||||||||||||||
| 2020 | 275,000 | 2,500,000 | 3,965,860 | 560 | 6,741,420 | ||||||||||||||||||||||||||||||
| Bruce Larson | 2022 | 500,000 | 1,750,000 | 3,108,697 | 63,907 | (5) | 5,422,604 | ||||||||||||||||||||||||||||
| Chief Human Resources Officer | 2021 | 275,000 | 2,750,000 | 8,477,626 | — | 11,502,626 | |||||||||||||||||||||||||||||
| Kewsong Lee | 2022 | 606,731 | — | 36,695,033 | 3,473,641 | (6) | 40,775,405 | ||||||||||||||||||||||||||||
| Former Chief Executive Officer | 2021 | 275,000 | 5,500,000 | 36,110,256 | 437,245 | 42,322,501 | |||||||||||||||||||||||||||||
| 2020 | 275,000 | 5,500,000 | 10,274,286 | 334,917 | 16,384,203 | ||||||||||||||||||||||||||||||
(1)This amount represents the aggregate grant date fair value of the RSUs granted in the year shown, computed in accordance with U.S. GAAP pertaining to equity-based compensation. For additional information regarding the determination of grant-date fair value see Note 16 to our consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022. For 2022, amounts reported reflect the annual discretionary time-vesting RSU awards that were granted to Messrs. Buser, Finn and Larson on February 1, 2022, the one-year performance-vesting RSUs that vest based on achievement of FRE, NRPR and FEAUM Raised targets that were granted to Messrs. Buser, Finn, Larson and Lee on February 8, 2022, the 2022 Performance-Based Stock Price Target Award granted to Mr. Lee on February 10, 2022, the time-vesting KEIP RSU award granted to Mr. Lee on May 1, 2022 and the incremental fair value generated by the modification of Mr. Lee’s Four-Year Performance-Vesting RSU Outperformance Award pursuant to the terms of Mr. Lee’s Separation Agreement on August 7, 2022 (computed as of the modification date of August 7, 2022 in accordance with ASC Topic 718). The grant date fair values of the one-year performance-vesting RSUs granted that vest based on achievement of FRE, NRPR and FEAUM Raised targets were computed in accordance with U.S. GAAP pertaining to equity-based compensation based upon the probable outcome of the performance conditions as of the grant date. Assuming the highest level of performance achievement as of the grant date, the grant date fair values of the one-year performance-vesting RSU awards that vest based on the achievement of FRE, NRPR and FEAUM Raised targets would have been: Mr. Lee - $24,000,000; Mr. Buser - $3,059,616; Mr. Finn - $3,059,616 and Mr. Larson - $3,059,616. The 2022 Performance-Based Stock Price Target Award was subject to market conditions, and not performance conditions, as defined under ASC Topic 718, and therefore did not have a maximum grant date fair value that differed from the grant date fair value of $16,343,201 as reported in the table. The 2022 Performance-Based Stock Price Target Award was forfeited upon Mr. Lee’s termination on August 7, 2022.
(2)This amount represents cash distributions of $125,928 received by Mr. Buser in respect of his equity pool interest for 2022 and $191,722 received by Mr. Buser in respect of his carried interest pool interest for 2022.
(3)This amount represents actual cash distributions received by Mr. Clare in respect of direct carried interest allocations at the fund level of $32,059,512 for 2022 ($3,598,546 of which was distributed in the form of 80,433 fully vested shares of our common stock pursuant to the Distributing a Portion of Realized Carry in Shares Program) and a cash payment of $4,500,000, representing a portion of the carried interest generated by our Carlyle Partners VI investment fund.
(4)This amount represents cash distributions of $976,257 received by Mr. Finn in respect of his direct carried interest allocations at the fund level for 2022, $434 received by Mr. Finn in respect of his equity pool interest for 2022 and $191,722 received by Mr. Finn in respect of his carried interest pool interest for 2022.
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(5)This amount represents cash distributions of $63,907 received by Mr. Larson in respect of his carried interest pool interest for 2022.
(6)This amount represents actual cash distributions received by Mr. Lee in respect of carried interest allocations at the fund level of $2,106,133 for 2022, $1,124,000 received by Mr. Lee as cash severance, as described below under “—Potential Payments Upon Termination or Change in Control—Former Chief Executive Officer,” our payment of $125,000 in legal fees and $55,000 in public relations fees incurred in connection with the negotiation of Mr. Lee’s Separation Agreement, $36,698 in respect of Mr. Lee’s personal use of a car service and $26,810 in respect of Mr. Lee’s use of a leased car (including related parking and automobile insurance expenses) and driving services of a Carlyle employee. The incremental cost for the car service is our actual cost. The personal use cost for the leased car includes both fixed and incremental costs, including the full cost of the lease, insurance costs, parking costs and an allocated portion of the compensation and benefits paid to the employee driver, in each case, through the date of Mr. Lee’s separation (at which time Mr. Lee ceased to be eligible to use the leased car and the services of the employee driver).
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GRANTS OF PLAN-BASED AWARDS IN 2022
The following table presents information concerning RSUs granted in 2022 to our named executive officers. The dollar amounts shown under the column heading “Grant Date Fair Value of Stock and Option Awards” in the table below were calculated in accordance with ASC Topic 718. For additional information regarding the determination of grant date fair value, see Note 16 to our consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022.
| Estimated Future Payouts under Equity Incentive Plan Awards | All Other Stock Awards: Number of Shares of Stock (#) | Grant Date Fair Value of Stock and Option Awards ($) | ||||||||||||||||||||||||||||||||||||
| Name | Grant Date | Threshold (#) | Target (#) | Maximum (#) | ||||||||||||||||||||||||||||||||||
| William E. Conway, Jr. | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||
| Curtis L. Buser | ||||||||||||||||||||||||||||||||||||||
Annual Time-Vesting RSUs(1) | 2/1/2022 | — | — | — | 31,871 | $ | 1,578,889 | |||||||||||||||||||||||||||||||
One-Year Performance-Vesting RSUs(2) | 2/8/2022 | 15,936 | 31,871 | 63,742 | — | $ | 1,529,808 | |||||||||||||||||||||||||||||||
| Peter J. Clare | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||
| Christopher Finn | ||||||||||||||||||||||||||||||||||||||
Annual Time-Vesting RSUs(1) | 2/1/2022 | — | — | — | 31,871 | $ | 1,578,889 | |||||||||||||||||||||||||||||||
One-Year Performance-Vesting RSUs(2) | 2/8/2022 | 15,936 | 31,871 | 63,742 | — | $ | 1,529,808 | |||||||||||||||||||||||||||||||
| Bruce Larson | ||||||||||||||||||||||||||||||||||||||
Annual Time-Vesting RSUs(1) | 2/1/2022 | — | — | — | 31,871 | $ | 1,578,889 | |||||||||||||||||||||||||||||||
One-Year Performance-Vesting RSUs(2) | 2/8/2022 | 15,936 | 31,871 | 63,742 | — | $ | 1,529,808 | |||||||||||||||||||||||||||||||
| Kewsong Lee | ||||||||||||||||||||||||||||||||||||||
Performance-Vesting RSUs(3) | 2/8/2022 | 125,000 | 250,000 | 500,000 | — | $ | 12,000,000 | |||||||||||||||||||||||||||||||
2022 Performance-Based Stock Price Target Award(4) | 2/10/2022 | 121,106 | 605,528 | 605,528 | — | $ | 16,343,201 | |||||||||||||||||||||||||||||||
KEIP RSUs(5) | 5/1/2022 | — | — | — | 9,695 | $ | 351,832 | |||||||||||||||||||||||||||||||
Modified Four-Year Performance-Vesting RSU Outperformance Award (6) | 8/7/2022 | 250,000 | 500,000 | 750,000 | — | $ | 8,000,000 | |||||||||||||||||||||||||||||||
(1)Represents discretionary time-vesting RSU grants awarded to Messrs. Buser, Finn and Larson. These RSU grants will be eligible to vest 40% on August 1, 2023, 30% on August 1, 2024 and 30% on August 1, 2025.
(2)Represents performance-vesting RSU awards that vest based on achievement of FRE, NRPR and FEAUM Raised targets granted to Messrs. Buser, Finn and Larson. The grant date fair value of these performance-vesting RSUs was computed in accordance with U.S. GAAP pertaining to equity-based compensation based upon the probable outcome of the performance conditions as of the grant date.
(3)Represents the fifth installment of the performance-vesting RSUs granted to Mr. Lee in 2018 that vest based on achievement of FRE, NRPR and FEAUM Raised targets established in 2022. The grant date fair value of these performance-vesting RSUs was computed in accordance with U.S. GAAP pertaining to equity-based compensation based upon the probable outcome of the performance conditions as of the grant date.
(4)Represents a discretionary performance-vesting RSU grant award to Mr. Lee on February 10, 2022 that was eligible to vest in February 2027, subject to Mr. Lee’s continued employment through the vesting date, based on the attainment of certain 20-consecutive trading day average closing stock prices. This award was subject to market conditions, and not performance conditions, as defined under ASC Topic 718. In connection with the termination of his employment in August 2022, Mr. Lee forfeited this award and no portion vested.
(5)Represents a time-vesting RSU grant awarded to Mr. Lee under the KEIP on May 1, 2022 that vested on November 1, 2022.
(6)Represents the incremental fair value generated by the modification of Mr. Lee’s Four-Year Performance-Vesting RSU Outperformance Award pursuant to the terms of Mr. Lee’s Separation Agreement on August 7, 2022 (computed as of the modification date of August 7, 2022 in accordance with ASC Topic 718). The modification to Mr. Lee’s Four-Year Performance-Vesting RSU Outperformance Award is described in greater detail below under “—Potential Payments Upon Termination or Change in Control—Former Chief Executive Officer”. Mr. Lee’s Three-Year Performance-Vesting RSU Outperformance Award and Mr. Lee’s Performance-Vesting RSUs (granted on February 8, 2022 and reflected above) were also modified pursuant to the terms of Mr. Lee’s Separation Agreement on August 7, 2022, but such modifications did not generate any incremental fair value (as determined in accordance with ASC Topic 718).
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NARRATIVE DISCLOSURE TO SUMMARY COMPENSATION TABLE AND GRANTS OF PLAN-BASED AWARDS TABLE
EQUITY INCENTIVE PLAN AWARDS
In connection with our initial public offering, the firm adopted the Equity Incentive Plan (which was subsequently amended and restated to reflect our conversion to a corporation and was further amended and restated in 2021 and which we are requesting to amend and restate further pursuant to Item 4), which is a source of new equity-based awards and permits us to grant to our senior Carlyle professionals, employees, directors and consultants non-qualified options, stock appreciation rights, common stock, restricted stock, RSUs, phantom stock units and other awards based on our common stock. Unvested annual discretionary RSUs generally will be forfeited upon termination of employment unless, in certain instances, such termination is within a fixed period following the occurrence of a Change in Control (as defined in the Equity Incentive Plan) or due to the holder’s death or disability. For a description of the potential vesting that the named executive officers may be entitled to with respect to such RSU awards in connection with a Change in Control or certain terminations of employment see “—Potential Payments upon Termination or Change in Control” below. In addition, all vested and unvested annual discretionary RSUs will be immediately forfeited in the event the holder is terminated for cause, or if such person materially breaches any applicable restrictive covenant. For RSU awards made in February 2018 and later, the award agreements generally contain non-solicitation provisions that restrict participants’ ability to solicit Carlyle investors or employees during the one-year period following a participant’s termination of the provision of services to Carlyle. For more information regarding these RSUs granted to our named executive officers under the Equity Incentive Plan, including the vesting criteria, see the sections entitled “Compensation Elements—Long-Term Equity Awards” and “Compensation Elements—Other 2022 Compensation Opportunities—Legacy Key Executive Incentive Program (KEIP)” above.
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Compensation Matters
OUTSTANDING EQUITY AWARDS AT 2022 FISCAL YEAR-END
The following table provides information regarding outstanding unvested equity awards held by our named executive officers as of December 31, 2022. The dollar amounts shown in the table below were calculated by multiplying the number of unvested RSUs reported for the named executive officer by the closing market price of $29.84 per share on December 30, 2022, the last trading day of 2022.
| Stock Awards | |||||||||||||||||||||||
Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($) | Number of Equity Incentive Shares or Units of Stock That Have Not Vested (#) | Market Value of Equity Incentive Shares or Units of Stock That Have Not Vested ($) | ||||||||||||||||||||
| William E. Conway, Jr. | — | $ | — | — | $ | — | |||||||||||||||||
| Curtis L. Buser | 226,046 | (1) | $ | 6,745,213 | 69,603 | (5) | $ | 2,076,954 | |||||||||||||||
| Peter J. Clare | 92,804 | (2) | $ | 2,769,271 | 278,412 | (6) | $ | 8,307,814 | |||||||||||||||
| Christopher Finn | 226,046 | (3) | $ | 6,745,213 | 69,603 | (5) | $ | 2,076,954 | |||||||||||||||
| Bruce Larson | 195,518 | (4) | $ | 5,834,257 | 69,603 | (5) | $ | 2,076,954 | |||||||||||||||
| Kewsong Lee | 1,152,043 | (7) | $ | 34,376,963 | — | $ | — | ||||||||||||||||
(1)The amount reported for Mr. Buser is composed of 51,753 discretionary time-vesting RSUs that will be eligible to vest on August 1, 2023; 29,343 discretionary time-vesting RSUs that will be eligible to vest on August 1, 2024; 9,561 discretionary time-vesting RSUs that will be eligible to vest on August 1, 2025; 92,804 time-based strategic equity RSUs of which 23,201 time-based strategic equity RSUs vested on February 1, 2023, 23,201 time-based strategic equity RSUs will be eligible to vest on February 1, 2024 and 46,402 time-based strategic equity RSUs will be eligible to vest on February 1, 2025; 19,384 one-year performance-vesting RSUs that were earned as of the end of the fiscal year based on 2022 performance and that vested on February 7, 2023, the date we certified the attainment of the established performance metrics; and 23,201 performance-based strategic equity RSUs that were earned as of the end of the fiscal year based on 2022 performance and vested on February 7, 2023, the date we certified the attainment of the established performance metrics.
(2)The amount reported for Mr. Clare is composed of 92,804 performance-based strategic equity RSUs that were earned as of the end of the fiscal year based on 2022 performance and vested on February 7, 2023, the date we certified the attainment of the established performance metrics.
(3)The amount reported for Mr. Finn is composed of 51,753 discretionary time-vesting RSUs that will be eligible to vest on August 1, 2023; 29,343 discretionary time-vesting RSUs that will be eligible to vest on August 1, 2024; 9,561 discretionary time-vesting RSUs that will be eligible to vest on August 1, 2025; 92,804 time-based strategic equity RSUs of which 23,201 time-based strategic equity RSUs vested on February 1, 2023, 23,201 time-based strategic equity RSUs will be eligible to vest on February 1, 2024 and 46,402 time-based strategic equity RSUs will be eligible to vest on February 1, 2025; 19,384 one-year performance-vesting RSUs that were earned as of the end of the fiscal year based on 2022 performance and that vested on February 7, 2023, the date we certified the attainment of the established performance metrics; and 23,201 performance-based strategic equity RSUs that were earned as of the end of the fiscal year based on 2022 performance and vested on February 7, 2023, the date we certified the attainment of the established performance metrics.
(4)The amount reported for Mr. Larson is composed of 26,878 discretionary time-vesting RSUs that will be eligible to vest on August 1, 2023; 23,690 discretionary time-vesting RSUs that will be eligible to vest on August 1, 2024; 9,561 discretionary time-vesting RSUs that will be eligible to vest on August 1, 2025; 92,804 time-based strategic equity RSUs of which 23,201 time-based strategic equity RSUs vested on February 1, 2023, 23,201 time-based strategic equity RSUs will be eligible to vest on February 1, 2024 and 46,402 time-based strategic equity RSUs will be eligible to vest on February 1, 2025; 19,384 one-year performance-vesting RSUs that were earned as of the end of the fiscal year based on 2022 performance and that vested on February 7, 2023, the date we certified the attainment of the established performance metrics; and 23,201 performance-based strategic equity RSUs that were earned as of the end of the fiscal year based on 2022 performance and vested on February 7, 2023, the date we certified the attainment of the established performance metrics.
(5)The amount reported for Messrs. Buser, Finn and Larson is composed of 23,201 performance-based strategic equity RSUs that are eligible to vest in February 2024 and 46,402 performance-based strategic equity RSUs that are eligible to vest in February 2025.
(6)The amount reported for Mr. Clare is composed of 92,804 performance-based strategic equity RSUs that are eligible to vest in February 2024 and 185,608 performance-based strategic equity RSUs that are eligible to vest in February 2025. Pursuant to the terms of the applicable award agreement, such RSUs would be forfeited upon Mr. Clare’s retirement on April 30, 2023.
(7)The amount reported for Mr. Lee is composed of 250,000 one-time CEO time-vesting RSUs which vested on February 1, 2023; 152,043 performance-vesting RSUs that were earned as of the end of the fiscal year based on 2022 performance, which vested on February 7, 2023, the date on which we certified the attainment of the established performance metrics; 750,000 four-year performance-vesting outperformance RSUs that were earned as of the end of the fiscal year based on performance for the period from January 1, 2019 through December 30, 2022 and that vested on February 7, 2023, the date we certified the attainment of the established performance metrics. The amount reported does not include any amount in respect of the target 100,000 three-year performance-vesting outperformance RSUs because as of the end of the fiscal year, based on performance for the period from January 1, 2020 through December 30, 2022, the related performance conditions were not achieved and 0 RSUs were earned in respect thereof, as we certified on February 7, 2023.
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Compensation Matters
OPTION EXERCISES AND STOCK VESTED IN 2022
As we have never issued any options, our named executive officers had no option exercises during the year ended December 31, 2022. Each of our named executive officers had equity awards vest during the year ended December 31, 2022.
| Stock Awards | |||||||||||
Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($)(6) | ||||||||||
| William E. Conway, Jr. | — | $ | — | ||||||||
Curtis L. Buser(1) | 262,088 | $ | 12,205,277 | ||||||||
Peter J. Clare(2) | 217,804 | $ | 11,037,227 | ||||||||
Christopher Finn(3) | 246,805 | $ | 11,610,615 | ||||||||
Bruce Larson(4) | 65,243 | $ | 3,061,092 | ||||||||
Kewsong Lee(5) | 945,303 | $ | 47,433,628 | ||||||||
(1)The value for Mr. Buser is based on the value of 178,280 shares received upon the vesting of RSUs on February 8, 2022 and 83,808 shares received upon the vesting of RSUs on August 1, 2022.
(2)The value for Mr. Clare is based on the value of 125,000 shares received upon the vesting of RSUs on February 1, 2022 and 92,804 shares received upon the vesting of RSUs on February 8, 2022.
(3)The value for Mr. Finn is based on the value of 178,280 shares received upon the vesting of RSUs on February 8, 2022 and 68,525 shares received upon the vesting of RSUs on August 1, 2022.
(4)The value for Mr. Larson is based on the value of 46,402 shares received upon the vesting of RSUs on February 8, 2022 and 18,841 shares received upon the vesting of RSUs on August 1, 2022.
(5)The value for Mr. Lee is based on the value of 250,000 shares received upon the vesting of RSUs on February 1, 2022; 685,608 shares received upon the vesting of RSUs on February 8, 2022; and 9,695 shares received upon the vesting of RSUs on November 1, 2022.
(6)The value realized on vesting was calculated by multiplying the number of shares of common stock received upon vesting by the closing market price per share of common stock on the applicable vesting date.
PENSION BENEFITS FOR 2022
We do not provide pension benefits to our named executive officers.
NONQUALIFIED DEFERRED COMPENSATION FOR 2022
We do not provide defined contribution plans for the deferral of compensation on a basis that is not tax-qualified.
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
Other than as described below, none of our named executive officers are entitled to any additional payments or benefits upon termination of employment, upon a change in control of our company or upon retirement, death or disability.
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Compensation Matters
FORMER CHIEF EXECUTIVE OFFICER
On August 7, 2022 we entered into a Separation Agreement with Mr. Lee in connection with the termination of his employment, which provided for the payments and benefits summarized below in exchange for Mr. Lee executing a release of claims in favor of Carlyle and its affiliates, agreeing to provide consulting services as a Senior Advisor through December 31, 2022 in order to assist in the transition of his duties and complying with the restrictive covenants summarized below. The Separation Agreement provided that Mr. Lee was entitled to receive the benefits he was owed under his employment agreement and equity award agreements, in accordance with the provisions therein requiring payment or other benefits in connection with a termination by Carlyle without Cause or by Mr. Lee for Good Reason, provided that the fifth and final installment of his performance-vesting RSUs and the three-year and four-year performance-vesting RSU outperformance awards he was granted in 2019 and 2020 were modified to provide for vesting based on actual performance instead of target.
Mr. Lee agreed in the Separation Agreement to remain bound by non-solicitation covenants limiting his ability to solicit (i) Carlyle’s employees or participate in any capacity in any transactions that Carlyle was actively considering investing in or offering to invest in prior to his separation until August 7, 2023, and (ii) Carlyle’s investors until December 31, 2022. Mr. Lee also agreed to comply with restrictive covenants limiting his ability to compete with Carlyle until December 31, 2022. The Separation Agreement also reaffirmed Mr. Lee’s confidentiality covenants. The Separation Agreement also provides that Mr. Lee and Carlyle are subject to certain cooperation covenants and, until August 7, 2027, mutual non-disparagement obligations.
CASH SEVERANCE PAYMENTS
Pursuant to the terms of the Separation Agreement, Mr. Lee received an aggregate cash amount equal to $1,405,000 in cash severance, which was paid in five installments of $281,000 in each of September, October, November and December of 2022 and January of 2023. This severance amount was calculated pursuant to the terms of the Employment Agreement we entered into with Mr. Lee on October 23, 2017, as amended in connection with the Conversion on January 1, 2020, and reflects the severance owed to Mr. Lee in connection with a termination of Mr. Lee’s employment by Carlyle without Cause or by Mr. Lee for Good Reason, and was computed as a function of Mr. Lee’s base salary of $1,000,000, plus the average formulaic bonus paid to Mr. Lee in 2020 and 2021 ($2,500,000) plus the COBRA premium for Mr. Lee and his covered dependents, and pro-rated for the period remaining in 2022 following Mr. Lee’s termination.
Additionally, pursuant to the terms of the Separation Agreement and consistent with the terms of Mr. Lee’s Employment Agreement for the amount owed to Mr. Lee upon a termination of Mr. Lee’s employment by Carlyle without Cause or by Mr. Lee for Good Reason, Mr. Lee was entitled to receive a prorated formulaic bonus for calendar year 2022 determined by reference to the annual dividend paid to shareholders in respect of calendar year 2022 times 2.5 million. For calendar year 2022, our aggregate dividend was $1.30 per share, resulting in a formulaic bonus amount of $3,250,000, which amount was prorated to reflect Mr. Lee’s partial period of service in 2022 and resulted in a cash payment to Mr. Lee of $1,950,000, which amount was paid to Mr. Lee in February 2023.
In connection with the negotiation of the Separation Agreement, we also paid for $125,000 in legal fees incurred by Mr. Lee, as well as $55,000 in expenses incurred by Mr. Lee for public relations services.
LONG-TERM EQUITY AWARDS
2018-2022 RSUs
Pursuant to the terms of his Employment Agreement, in February 2018 Mr. Lee received a one-time grant of 1,250,000 time-vesting RSUs and 1,250,000 performance-vesting RSUs under the Equity Incentive Plan.
TIME-VESTING RSUs