Michael J. Cavanagh, the longtime JPMorgan Chase executive who is preparing to join the Carlyle Group, will make $7 million in salary and bonus in each of his first three years at the private equity giant, a regulatory filing on Friday showed.
Mr. Cavanagh, who this week was named the new co-president and co-chief operating officer of Carlyle, is also set to receive $32 million in restricted stock when he joins the firm, to replace unvested compensation that he gave up by leaving JPMorgan. His 933,416 restricted shares will vest over a three-year period.
In addition, Mr. Cavanagh will participate in a new compensation program aimed at retaining senior talent, the filing said. Under that program, he will receive restricted stock equal to 0.5 percent of the investment profits collected by Carlyle, known as carried interest, on investments the firm makes in a given year. The program is intended to push rewards years into the future, as Carlyle typically takes five years or so to start harvesting a given investment.
Glenn A. Youngkin, a 19-year veteran of Carlyle who is Mr. Cavanagh’s new partner as co-president and co-chief operating officer, will also get restricted stock worth 0.5 percent of carried interest under the new retention program. Adena T. Friedman, the chief financial officer, will get stock worth 0.1 percent of carried interest, the filing said. The stock vests over six months for all three executives.
Mr. Cavanagh, whose departure from JPMorgan came as a shock to Wall Street, may be taking a pay cut, based on his salary and bonus alone. His compensation last year was not made public, but a report in The Financial Times said it was $17 million.
Over time, however, he may be able to cash in at Carlyle, particularly as he builds an equity stake in the firm. Of his $7 million annual pay, $2 million is in restricted stock that will vest over five years.
The three founders of Carlyle, David M. Rubenstein, Daniel A. D’Aniello and William E. Conway Jr., together earned about $750 million last year, including dividends on their holdings and profits from personal investments in Carlyle’s funds.
