Bonus Watch '14: Mike Cavanagh - Dealbreaker

Bonus Watch '14: Mike Cavanagh

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Mike Cavanaugh gave up a lot when he quit his job as the co-head of JP Morgan's corporate and investment bank to become president and co-COO of the Carlyle Group. He gave up the chance to see the words "heir apparent" mentioned in every article written about him for the next five years, or until Jamie Dimon decides to retire. He gave up the bi-monthly treat of having Dimon take him down to the entrance of 270 Park and tell him that one day, everything the light touches will be his. He also gave up millions a year if you're only looking at base pay, though it's unclear why you would do that.

Annually, Mr. Cavanagh will earn at least $5 million in cash and be awarded $2 million worth of stock during his first three years at the firm, the filing says. The cash component of his pay breaks down to a base salary of $275,000 a year--the same rate at which all Carlyle's top executives are paid--an annual guaranteed minimum bonus of $2.725 million for his first three years, along with a $6 million signing bonus paid over three years, according to the filing. Mr. Cavanagh made about $17 million at J.P. Morgan last year, according to people familiar with the matter. Mr. Dimon made about $20 million.

Like many executives who lead publicly traded private-equity firms, however, base pay is only part of their potential take-home earnings. Last year Carlyle's three founders, to whom Mr. Cavanagh will report, collectively took home about $750 million, including dividends paid on their Carlyle shares. Salary represented about a tenth of a percent of their collective haul, according to securities filings. When he starts at the firm, Mr. Cavanagh will be enrolled in an incentive program Carlyle is launching for three top executives. Each year he and Glenn Youngkin, whom Mr. Cavanagh will work alongside, and Chief Financial Officer Adena Friedman will be awarded Carlyle shares worth a percentage of the firm's cut of deal profits, a perk that could add tens of millions of dollars to their take-home over time.

Carlyle to Pay Ex-JP Morgan Executive $7M Cash, Stock Annually [WSJ]

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