Opinion

Felix Salmon

Truth in public relations, Blackstone edition

By Felix Salmon
August 14, 2009

Blackstone’s Steve Schwarzman made a ridiculous $702 million last year, according to The Corporate Library, and Scott Malone of Reuters phoned for a reaction:

“This is absurd,” said Blackstone spokesman Peter Rose.

Well, yes, Peter, it is. But maybe not in the sense that you mean.

Comments
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When Blackstone went public two years ago, I believe it was Steve Pearlstein who noted that, caveat emptor, it should give people pause when the smartest guys in the room with all the inside info are “selling” and not “buying.” Essentially that was what Schwartzman, Petersen and the other private equity owners of Blackstone at the time correctly percieved as that they were at the near peak of the market. But thousands of other “smart guys” running pension funds, mutual funds, and sovereign wealth funds. The sad thing is that Schwartzmann is apparently incapable of feeling he has any fiduciary duty to the shareholders of Blackstone, instead seeing them as sheep to be sheared, and completely legally to it appears. Other than a more progressive tax system, I don’t know if anything can be done about this given the structure of the modern corporation (I note that the explosion in U.S. CEO pay occurred after the drastic reduction in individual income tax rates that occurred under Ronald Reagan. I intuit that may not have been a coincidence). All republics eventually decline and collapse, and almost everytime it has been the growing selfishness, greed, and shortsigtedness of the republic’s ruling elite that brought it down from Athens, to Rome, the Italian republics of the late Medieval and Renaissance. Wall Street, now controlling Washington more than anytime in history, (far more than when the Houses of Morgan and Mellon held sway) appears narcissistic in seeking satiate their own insatiable greed and oblivious to the effects on the rest of the country or the world.

Posted by Rick Kane | Report as abusive
 

Oh Felix, you are so funny. Of course over 99% of this “compensation” is the vesting of equity grants he received in exchange for his partnership interest in the firm he founded, and thus is simply paper-compensation (he owns the same amount of the firm, before and after vesting). But why get facts get in the way of a good laugh.

Posted by right | Report as abusive
 

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