filings.toolsItem 11. EXECUTIVE COMPENSATION
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Item 11. EXECUTIVE COMPENSATION
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Compensation Discussion and Analysis
Overview of Compensation Philosophy and Program
The intellectual capital collectively possessed by our senior managing directors (including our named executive officers) and other employees is the most important asset of our firm. We invest in people. We hire qualified people, train them, encourage them to provide their best thinking to the firm for the benefit of the investors in the funds we manage, and compensate them in a manner designed to retain and motivate them and align their interests with those of the investors in our funds.
Our overriding compensation philosophy for our senior managing directors and certain other employees is that compensation should be composed primarily of (a) annual cash bonus payments tied to the performance of the applicable business unit(s) in which such employee works, (b) performance interests (composed primarily of carried interest and incentive fee interests) tied to the performance of the investments made by the funds in the business unit in which such employee works or for which he or she has responsibility, (c) deferred equity awards reflecting the value of our common units, and (d) additional cash payments and equity awards tied to extraordinary performance of such employee or other circumstances (for example, if there has been a change of role or responsibility). We believe base salary should represent a significantly lesser component of total compensation. We believe the appropriate combination of annual cash bonus payments and performance interests or deferred equity awards encourages our senior managing directors and other employees to focus on the underlying performance of our investment funds, as well as the overall performance of the firm and interests of our common unitholders. To that end, the primary form of compensation to our senior managing directors and other employees who work in our carry fund operations is generally a combination of annual cash bonus payments related to the performance of those carry fund operations, carried interest or incentive fee interests and, in specified cases, deferred equity awards. Along the same lines, the primary form of compensation to our senior managing directors and other employees who do not work in our carry fund operations is generally a combination of annual cash bonus payments tied to the performance of the applicable business unit in which such employee works and deferred equity awards.
Employees at higher total compensation levels are generally targeted to receive a greater percentage of their total compensation payable in annual cash bonuses, participation in performance interests, and deferred equity awards and a lesser percentage in the form of base salary compared to employees who are paid less. We believe that the proportion of compensation that is “at risk” should increase as an employee’s level of responsibility rises.
Our compensation program includes significant elements that discourage excessive risk taking and aligns the compensation of our employees with the long-term performance of the firm. For example, notwithstanding the fact that for accounting purposes we accrue compensation for the Performance Plans (as defined below) related to our carry funds as increases in the carrying value of the portfolio investments are recorded in those carry funds, 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, our Performance Plans entitle us to “clawback” carried interest payments previously made to an employee for the benefit of the limited partner investors in that fund, and we escrow a portion of all carried interest payments made to employees to help fund their potential future “clawback” obligations, all of which further discourages excessive risk-taking by our employees. Similarly, for our investment funds that pay incentive fees,
those incentive fees are only paid to the firm and employees of the firm to the extent an applicable fund’s portfolio of investments has profitably appreciated in value (in most cases above a specified level) during the applicable period. In addition, and as noted below with respect to our named executive officers, the requirement that we have our professional employees invest in certain of the funds they manage directly aligns the interests of our professionals and our investors. In most cases, these investments represent a significant percentage of employees’ after-tax compensation. Lastly, because our equity awards have significant vesting or deferral provisions, the actual amount of compensation realized by the recipient will be tied directly to the long-term performance of our common
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units. In addition, in applicable jurisdictions, specifically in the European Union, our compensation program includes additional remuneration policies that may limit or otherwise alter the compensation for certain employees consistent with local regulatory requirements and aimed at, among other things, discouraging inappropriate risk taking and aligning compensation with the firm’s strategy and long-term interests consistent with our general compensation program.
We believe our current compensation and benefit allocations for senior professionals are best in class and are consistent with companies in the alternative asset management industry. We do not generally rely on compensation surveys or compensation consultants. Our senior management periodically reviews the effectiveness and competitiveness of our compensation program, and such reviews may in the future involve the assistance of independent consultants.
Personal Investment Obligations. As part of our compensation philosophy and program, we require our named executive officers to personally invest their own capital in and alongside the funds that we manage. We believe that this strengthens the alignment of interests between our executive officers and the investors in those investment funds. (See “— Item 13. Certain Relationships and Related Transactions, and Director Independence — Investment in or Alongside Our Funds.”) In determining compensation for our named executive officers, we do not take into account the gains or losses attributable to the personal investments by our named executive officers in our investment funds.
For equity awards granted in 2014 and prior years, we also require each of our named executive officers to hold at least 25% of their vested units (other than vested units awarded under our Deferred Compensation Plan) throughout their employment with the firm and generally for one year following the termination of employment. We believe the continued ownership by our named executive officers of significant amounts of our equity through their direct and indirect interests in the Blackstone Holdings Partnerships affords significant alignment of interests with our common unitholders. For equity awards granted in 2015 and onward our named executive officers are required to hold 25% of their vested units (other than vested units awarded under our Deferred Compensation Plan) until the earlier of (1) ten years after the applicable vesting date and (2) one year following termination of employment.
Named Executive Officers
In 2017, our named executive officers were:
| Executive | Title | |
| Stephen A. Schwarzman | Chairman and Chief Executive Officer | |
| Hamilton E. James | Executive Vice Chairman | |
| J. Tomilson Hill | Vice Chairman | |
| Michael S. Chae | Chief Financial Officer | |
| Joan Solotar | Senior Managing Director — Head of Multi-Asset Investing and External Relations |
Compensation Elements for Named Executive Officers
The key elements of the compensation of the named executive officers listed in the tables below for 2017 were base compensation, which is composed of base salary, cash bonus and equity-based compensation, and performance compensation, which is composed of carried interest and incentive fee allocations:
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Base Salary. Each named executive officer received a $350,000 annual base salary in 2017, which equals the total yearly partnership drawings that were received by each of our senior managing directors prior to our initial public offering in 2007. In keeping with historical practice, we continue to pay this amount as a base salary.
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Annual Cash Bonus Payments / Deferred Equity Awards. Since our initial public offering, Mr. Schwarzman has not received any cash compensation other than the $350,000 annual salary described above and the actual
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realized carried interest distributions or incentive fees he may receive in respect of his participation in the carried interest or incentive fees earned from our funds through our Performance Plans described below. We believe that having Mr. Schwarzman’s compensation largely based on ownership of a portion of the carried interest or incentive fees earned from our funds aligns his interests with those of the investors in our funds and our common unitholders.
Each of our named executive officers other than Mr. Schwarzman received annual cash bonus payments in 2017 in addition to their base salary. These cash payments included participation interests in the earnings of the firm’s various investment businesses. Mr. Hill, who has primary responsibility for Hedge Fund Solutions, our funds of hedge funds operation, received a majority of his cash payments based upon the performance of that business. Indicative participation interests for each year were disclosed to a named executive officer at the beginning of such year and represented estimates of the expected percentage participation that such named executive officer may have had in the relevant business unit(s)’ earnings for that same year. However, the ultimate cash payments paid to the named executive officers at the end of the year in respect of their participation interests were determined in the discretion of Mr. Schwarzman and Mr. James, as described below. Earnings for a business unit are calculated based on the annual operating income of that business unit and are generally a function of the performance of such business unit, which is evaluated by Mr. Schwarzman and subject to modification by the firm in its sole discretion. The ultimate cash payment amounts were based on (a) the prior and anticipated performance of the named executive officer, (b) the prior and anticipated performance of the segments and product lines in which the officer serves and for which he has responsibility, and (c) the estimated participation interests given to the officer at the beginning of the year in respect of the investments to be made in that year. We make annual cash bonus payments in the first quarter of the ensuing year to reward individual performance for the prior year. The ultimate cash payments that are made are fully discretionary as further discussed below under “— Determination of Incentive Compensation.”
For 2017, all employees other than Mr. Schwarzman and Mr. James were deemed eligible to participate in the Deferred Compensation Plan. The Deferred Compensation Plan provides for the deferral of a portion of each participant’s annual cash bonus payment. The portion deferred is prescribed under the Deferred Compensation Plan and is subject to certain adjustments, including reductions for mandatory contributions to our investment funds. By deferring a portion of a participant’s compensation for three years, the Deferred Compensation Plan acts as an employment retention mechanism and thereby enhances the alignment of interests between such participant and the firm. Many asset managers that are public companies utilize deferred compensation plans as a means of retaining and motivating their professionals, and we believe that it is in the interest of our common unitholders to do the same for our personnel.
On January 17, 2018, Messrs. Hill and Chae and Ms. Solotar each received a deferral award under the Deferred Compensation Plan of deferred restricted common units in respect of their service in 2017. The amount of each participant’s annual cash bonus payment deferred under the Deferred Compensation Plan is calculated pursuant to a deferral rate table using the participant’s total annual incentive compensation, which generally includes such participant’s annual cash bonus payment and any incentive fees earned in connection with our investment funds and is subject to certain adjustments, including reductions for mandatory contributions to our investment funds. The percentage of the named executive officer’s 2017 annual cash bonus payment mandatorily deferred into deferred restricted common units was approximately 31.1% for Mr. Hill, 0.4% for Mr. Chae and 29.5% for Ms. Solotar. These awards are reflected as stock awards for fiscal 2017 in the Summary Compensation Table and in the Grants of Plan-Based Awards in 2017 table.
- Discretionary Equity Awards. In January 2017, Mr. Hill and Ms. Solotar were each awarded a discretionary award of 45,785 and 30,523 deferred restricted Blackstone Holdings Partnership Units, respectively. These awards reflected 2016 performance and were also intended to further promote retention and to incentivize future performance. The awards were granted under the 2007 Equity Incentive Plan on July 1, 2017, subject to the named executive officer’s continued employment through such date. These awards have the same vesting and other terms as the discretionary awards granted to Mr. Hill and Ms. Solotar in 2016 in respect of 2015 performance and in 2015 in respect of 2014 performance, which terms are described under the caption “Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards in 2017 — Terms of Blackstone Holdings Partnership Units
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Granted in 2017 and Prior Years” below. These awards are reflected as stock awards for fiscal 2017 in the Summary Compensation Table and in the Grants of Plan-Based Awards in 2017 table.
In January 2018, Mr. Hill and Ms. Solotar were each awarded a discretionary award of deferred restricted Blackstone Holdings Partnership Units with a value of $7,500,000 and $1,000,000, respectively. These awards reflected 2017 performance and, with respect to Ms. Solotar, the award is also intended to further promote retention and to incentivize future performance. The awards will be granted under the 2007 Equity Incentive Plan and are expected to be granted on July 1, 2018, subject to the named executive officer’s continued employment through such date. The awards will have the same vesting and other terms as the discretionary awards granted in 2017 in respect of 2016 performance. These awards will be reflected as stock awards for fiscal 2018 in the Summary Compensation Table and in the Grants of Plan-Based Awards in 2018 table.
- Participation in Performance Fees. During 2017, all of our named executive officers participated in the carried interest of our carry funds or the incentive fees of our funds that pay incentive fees through their participation interests in the carry or incentive fee pools generated by these funds. The carry or incentive fee pool with respect to each fund in a given year is funded by a fixed percentage of the total amount of carried interest or incentive fees earned by Blackstone for such fund in that year. We refer to these pools and employee participation therein as our “Performance Plans” and payments made thereunder as “performance payments.” Because the aggregate amount of performance payments payable through our Performance Plans is directly tied to the performance of the funds, we believe this fosters a strong alignment of interests between the investors in those funds and these named executive officers, and therefore benefits our unitholders. In addition, most alternative asset managers, including several of our competitors, use participation in carried interest or incentive fees as a central means of compensating and motivating their professionals, and we believe that we must do the same in order to attract and retain the most qualified personnel. For purposes of our financial statements, we are treating the income allocated to all our personnel who have participation interests in the carried interest or incentive fees generated by our funds as compensation, and the amounts of carried interest and incentive fees earned by named executive officers are reflected as “All Other Compensation” in the Summary Compensation Table. Distributions in respect of our Performance Plans for each named executive officer are determined on the basis of the percentage participation in the relevant investments previously allocated to that named executive officer, which percentage participations are established in January of each year in respect of the investments to be made in that year. The percentage participation for a named executive officer may vary from year to year and fund to fund due to several factors, and may include changes in the size and composition of the pool of Blackstone personnel participating in such Performance Plan in a given year, the performance of our various businesses, new developments in our businesses and product lines, and the named executive officer’s leadership and oversight of the business or corporate function for which the named executive officer is responsible and such named executive officer’s contributions with respect to our strategic initiatives and development. In addition, certain of our employees, including our named executive officers, may participate in profit sharing initiatives whereby these individuals may receive allocations of investment income from Blackstone’s firm investments. Our employees, including our named executive officers, may also receive equity awards in our investment advisory clients and/or be allocated securities of such clients that we have received.
(a) Carried Interest. Distributions of carried interest in cash (or, in some cases, in-kind) to our named executive officers and other employees who participate in our Performance Plans relating to our carry funds depends on the realized proceeds and timing of the cash realizations of the investments owned by the carry funds in which they participate. Our carry fund agreements also set forth specified preconditions to a carried interest distribution, which typically include that there must have been a positive return on the relevant investment and that the fund must be above its carried interest hurdle rate. In addition, as described below, employees or senior managing directors may also be required to have fulfilled specified service requirements in order to be eligible to receive carried interest distributions. For our carry funds, carried interest distributions for the named executive officer’s participation interests are generally made to the named executive officer following the actual realization of the investment, although a portion of such carried interest is held back by the firm in respect of any future “clawback” obligation related to the fund. In allocating participation interests in the carry pools, we have not historically taken into account
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or based such allocations on any prior or projected triggering of any “clawback” obligation related to any fund. To the extent any “clawback” obligation were to be triggered, carried interest previously distributed to a named executive officer would have to be returned to the limited partners of such fund, thereby reducing the named executive officer’s overall compensation for any such year. Moreover, because a carried interest recipient (including Blackstone itself) may have to fund more than his or her respective share of a “clawback” obligation under the governing documents (generally, up to an additional 50%), there is the possibility that the compensation paid to a
named executive officer for any given year could be significantly reduced or even negative in the event a “clawback” obligation were to arise.
Participation in carried interest generated by our carry funds for all participating named executive officers other than Mr. Schwarzman is subject to vesting. Vesting serves as an employment retention mechanism and thereby enhances the alignment of interests between a participant in our Performance Plans and the firm. For carried interest allocated on or prior to December 31, 2012 and carried interest earned in certain of our credit funds, each participating named executive officer (other than Mr. Schwarzman) vests in 25% of the carried interest related to an investment immediately upon the closing of the investment by a carry fund with the remainder vesting in equal installments on the first through third anniversary of the closing of that investment (unless an investment is realized prior to the expiration of such three-year anniversary, in which case such active executive officer is deemed 100% vested in the proceeds of such realizations). For carried interest allocated after December 31, 2012, the carried interest related to an investment vests in equal installments on the first through fourth anniversary of the closing of that investment (unless an investment is realized prior to the expiration of such four-year anniversary, in which case such active executive officer is deemed 100% vested in the proceeds of such realizations). In addition, any named executive officer who is retirement eligible will automatically vest in 50% of their otherwise unvested carried interest allocation upon retirement. (See “— Non-Competition and Non-Solicitation Agreements — Retirement.”) We believe that vesting of carried interest participation enhances the stability of our senior management team and provides greater incentives for our named executive officers to remain at the firm. Due to his unique status as a founder and the long-time chief executive officer of our firm, Mr. Schwarzman vests in 100% of his carried interest participation related to any investment by a carry fund upon the closing of that investment.
(b) Incentive Fees. Cash distributions of incentive fees to our named executive officers and other employees who participate in our Performance Plans relating to the funds that pay incentive fees depends on the performance of the investments owned by those funds in which they participate. For our investment funds that pay incentive fees, those incentive fees are only paid to the firm and employees of the firm to the extent an applicable fund’s portfolio of investments has profitably appreciated in value (in most cases above a specified level) during the applicable period and following the calculation of the profit split (if any) between the fund’s general partner or investment adviser and the fund’s investors, which occurs once a year (generally December 31 or June 30 of each year).
(c) Investment Advisory Client Interests. BXMT is an investment advisory client of Blackstone. Compensation we receive from investment advisory clients in the form of securities may be allocated to employees and senior managing directors. For example, in 2017, Messrs. Schwarzman, James and Chae and Ms. Solotar were allocated restricted shares of listed common stock of BXMT in connection with investment advisory services provided by Blackstone to BXMT. The value of these allocated restricted shares is reflected as “All Other Compensation” in the Summary Compensation Table.
- Other Benefits. Upon the consummation of our initial public offering in June 2007, we entered into a founding member agreement with our founder, Mr. Schwarzman, which provides specified benefits to him following his retirement. (See “— Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards in 2017 — Schwarzman Founding Member Agreement.”) Mr. Schwarzman and Mr. James are provided certain security services, which may include home security systems and monitoring, and personal and related security services. These security services are provided for our benefit, and we consider the related expenses to be appropriate business expenses rather than personal benefits for Mr. Schwarzman and Mr. James. Nevertheless, the expenses associated with these security services are reflected in the “All Other Compensation” column of the Summary Compensation Table below.
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Determination of Incentive Compensation
As our founder, Mr. Schwarzman sets his own compensation and reserves final approval of each named executive officer’s compensation, based on recommendations from Mr. James. For 2017, these decisions were based primarily on Mr. Schwarzman’s and Mr. James’s assessment of such named executive officer’s individual performance, operational performance for the segments or product lines in which the officer serves or for which he has responsibility, and the officer’s potential to enhance investment returns for the investors in our funds and service to our advisory clients, and to contribute to long-term unitholder value. In evaluating these factors, Mr. Schwarzman and Mr. James relied upon their judgment to determine the ultimate amount of a named executive officer’s annual
cash bonus payment and participation in carried interest, incentive fees and investment advisory client interests that was necessary to properly induce the named executive officer to seek to achieve our objectives and reward a named executive officer in achieving those objectives over the course of the prior year. Key factors that Mr. Schwarzman considered in making such determination with respect to Mr. James were his service as President and Chief Operating Officer, his role in overseeing the growth and operations of the firm, and his leadership on the strategic direction of the firm generally. Key factors that Mr. Schwarzman and Mr. James considered in making such determinations with respect to Mr. Hill were his leadership and oversight of our Hedge Fund Solutions business, including his role in the oversight and development of new products and strategies, and his leadership on strategic initiatives undertaken by the firm. Key factors that Mr. Schwarzman and Mr. James considered in making such determinations with respect to Mr. Chae were his leadership and oversight of our global finance, treasury, technology and corporate development function and his role in strategic initiatives undertaken by the firm. Key factors that Mr. Schwarzman and Mr. James considered in making such determinations with respect to Ms. Solotar were her leadership and oversight of our external relations function, her role, as the head of Private Wealth Solutions, in expanding our delivery of products to meet the needs of individual investors and smaller institutions, as well as her role in strategic initiatives undertaken by the firm. For 2017, Mr. Schwarzman and Mr. James also considered each named executive officer’s prior-year annual cash bonus payments, indicative participation interests disclosed to the named executive officer at the beginning of the year, his allocated share of performance interests through participation in our Performance Plans, the appropriate balance between incentives for long-term and short-term performance, and the compensation paid to the named executive officer’s peers within the firm.
Minimum Retained Ownership Requirements
The minimum retained ownership requirements for our named executive officers are described below under “— Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards in 2017 — Terms of Blackstone Holdings Partnership Units Granted in 2017 and Prior Years — Minimum Retained Ownership Requirements.”
Compensation Committee Report
The board of directors of our general partner does not have a compensation committee. The members of the executive committee of the board of directors identified below have reviewed and discussed with management the foregoing Compensation Discussion and Analysis and, based on such review and discussion, have determined that the Compensation Discussion and Analysis should be included in this annual report.
Stephen A. Schwarzman, Chairman
Hamilton E. James
J. Tomilson Hill
Bennett J. Goodman
Jonathan D. Gray
Compensation Committee Interlocks and Insider Participation
As described above, we do not have a compensation committee. Our founder Mr. Schwarzman makes all such compensation determinations based in large part on recommendations from Mr. James. For a description of certain
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transactions between us and Mr. Schwarzman, see “— Item 13. Certain Relationships and Related Transactions, and Director Independence.”
Summary Compensation Table
The following table provides summary information concerning the compensation of our Chief Executive Officer, our Chief Financial Officer and each of our three other most highly compensated employees who served as executive officers at December 31, 2017, for services rendered to us. These individuals are referred to as our named executive officers in this annual report.
| Name and Principal Position | Year | Salary | Bonus (a) | Stock Awards (b) | All Other Compensation (c) | Total | ||||||||||||||||||
| Stephen A. Schwarzman Chairman and Chief Executive Officer | 2017 | $ | 350,000 | $ | — | $ | — | $ | 125,169,429 | $ | 125,519,429 | |||||||||||||
| 2016 | $ | 350,000 | $ | — | $ | — | $ | 46,618,924 | $ | 46,968,924 | ||||||||||||||
| 2015 | $ | 350,000 | $ | — | $ | — | $ | 89,137,817 | $ | 89,487,817 | ||||||||||||||
| Hamilton E. James | 2017 | $ | 350,000 | $ | 45,978,814 | $ | — | $ | 61,426,748 | $ | 107,755,562 | |||||||||||||
| Executive Vice Chairman | 2016 | $ | 350,000 | $ | 37,497,853 | $ | — | $ | 20,446,203 | $ | 58,294,056 | |||||||||||||
| 2015 | $ | 350,000 | $ | 35,246,105 | $ | — | $ | 40,312,608 | $ | 75,908,713 | ||||||||||||||
| J. Tomilson Hill | 2017 | $ | 350,000 | $ | 10,440,761 | $ | 6,679,195 | $ | 3,776,367 | $ | 21,246,323 | |||||||||||||
| Vice Chairman | 2016 | $ | 350,000 | $ | 7,524,212 | $ | 6,975,943 | $ | 1,551,849 | $ | 16,402,004 | |||||||||||||
| 2015 | $ | 350,000 | $ | 9,253,650 | $ | 5,521,215 | $ | 1,634,816 | $ | 16,759,681 | ||||||||||||||
| Michael S. Chae | 2017 | $ | 350,000 | $ | 6,634,789 | $ | 27,723 | $ | 11,204,987 | $ | 18,217,499 | |||||||||||||
| Chief Financial Officer | 2016 | $ | 350,000 | $ | 5,144,258 | $ | 24,681,013 | $ | 2,585,167 | $ | 32,760,438 | |||||||||||||
| 2015 | $ | 350,000 | $ | 4,650,000 | $ | — | $ | 6,976,078 | $ | 11,976,078 | ||||||||||||||
| Joan Solotar | 2017 | $ | 350,000 | $ | 3,894,806 | $ | 2,797,091 | $ | 2,383,663 | $ | 9,425,560 | |||||||||||||
| Head of Private Wealth Solutions and External Relations | 2016 | $ | 350,000 | $ | 3,557,217 | $ | 2,121,750 | $ | 1,025,358 | $ | 7,054,325 | |||||||||||||
| 2015 | $ | 350,000 | $ | 3,154,837 | $ | 3,755,578 | $ | 1,423,016 | $ | 8,683,431 |
| (a) | The amounts reported in this column reflect the annual cash bonus payments made for performance in the indicated year. |
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The amounts reported as “bonus” for 2017 for Messrs. Hill and Chae and Ms. Solotar are shown net of their respective mandatory deferral pursuant to the Deferred Compensation Plan. The deferred amounts for 2017 were as follows: Mr. Hill, $4,709,239, Mr. Chae, $25,317 and Ms. Solotar, $1,626,158. For additional information on the Deferred Compensation Plan, see “— Nonqualified Deferred Compensation for 2017 — Narrative to Nonqualified Deferred Compensation for 2017 Table.”
| (b) | The reference to “stock” in this table refers to deferred restricted Blackstone Holdings Partnership Units or deferred restricted common units. The amounts reported in this column represent the grant date fair value of stock awards granted for financial statement reporting purposes in accordance with GAAP pertaining to equity-based compensation. The assumptions used in determining the grant date fair value are set forth in Note 16. “Equity-Based Compensation” in the “Notes to Consolidated Financial Statements” in “Part II. Item 8. Financial Statements and Supplementary Data.” |
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Amounts reported for 2017 reflect the following deferred equity awards granted on January 17, 2018 for 2017 performance pursuant to the Deferred Compensation Plan: Mr. Hill, 147,376 deferred restricted common units with a grant date fair value of $5,152,265, Mr. Chae, 793 deferred restricted common units with a grant date fair value of $27,723 and Ms. Solotar, 50,981 deferred restricted common units with a grant date fair value of $1,779,149. The grant date fair value of the stock award reflecting the deferred bonus amount is computed in accordance with GAAP and generally differs from the dollar amount of the portion of the bonus that is required to be deferred under the Deferred Compensation Plan. For additional information on the Deferred
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Compensation Plan, see “— Nonqualified Deferred Compensation for 2017 — Narrative to Nonqualified Deferred Compensation for 2017 Table.”
Amounts reported for 2017 also reflect the following discretionary equity awards granted on July 1, 2017 under the 2007 Equity Incentive Plan: Mr. Hill, 45,785 deferred restricted Blackstone Holdings Partnership Units and Ms. Solotar, 30,523 deferred restricted Blackstone Holdings Partnership Units. The July 1, 2017 grant date fair value of the stock award reflecting the discretionary equity award amount is computed in accordance with GAAP and generally differs from the dollar amount of the discretionary equity award which was determined in January 2017.
| (c) | Amounts reported for 2017 include distributions, whether in cash or in-kind, in respect of carried interest or incentive fee allocations relating to our Performance Plans to the named executive officer in 2017 as follows: $123,823,779 for Mr. Schwarzman, $61,139,636 for Mr. James, $11,130,564 for Mr. Chae, $3,776,367 for Mr. Hill and $2,353,894 for Ms. Solotar, respectively. Any in-kind distributions in respect of carried interest are reported based on the market value of the securities distributed as of the date of distribution. For 2017, Messrs. Schwarzman, James and Chae were the only named executive officers who received such in-kind distributions. We have determined to present compensation relating to carried interest and incentive fees within the Summary Compensation Table in the year in which such compensation is paid to the named executive officer under the terms of the relevant Performance Plan. Accordingly, the amounts presented in the table differ from the compensation expense recorded by us on an accrual basis for such year in respect of carried interest and incentive fees allocable to a named executive officer, which accrued amounts for 2017 are separately disclosed in this footnote to the Summary Compensation Table. We believe that the presentation of the actual amounts of carried interest- and incentive fee-related compensation paid to a named executive officer during the year, instead of the amounts of compensation expense we have recorded on an accrual basis, most appropriately reflects the actual compensation received by the named executive officer and represents the amount most directly aligned with the named executive officer’s actual performance. By contrast, the amount of compensation expense accrued in respect of carried interest and incentive fees allocable to a named executive officer can be highly volatile from year to year, with amounts accrued in one year being reversed in a following year, and vice versa, causing such amounts to be less useful as a measure of the compensation actually earned by a named executive officer in any particular year. |
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To the extent compensation expense recorded by us on an accrual basis in respect of carried interest or incentive fee allocations (rather than cash or in-kind distributions) were to be included for 2017, the amounts would be $132,132,182 for Mr. Schwarzman, $70,240,213 for Mr. James, $5,837,629 for Mr. Hill, $11,191,473 for Mr. Chae and $3,245,683 for Ms. Solotar. For financial statement reporting purposes, the accrual of compensation expense is equal to the amount of carried interest and incentive fees related to performance fee revenues as of the last day of the relevant period as if the performance fee revenues in the funds generating such carried interest or incentive fees were realized as of the last day of the relevant period.
With respect to Messrs. Schwarzman, James, Chae and Ms. Solotar, amounts shown for 2017 also include the value of restricted shares of listed common stock of BXMT allocated to such named executive officers based on the closing price of BXMT’s common stock on the date of the award as follows: $982,522 for Mr. Schwarzman, $267,112 for Mr. James, $74,423 for Mr. Chae and $29,769 for Ms. Solotar. These restricted shares will vest over three years with one-third of the shares vesting at the end of the first year after the date of the award and the remaining shares vesting in eight equal quarterly installments thereafter.
With the exception of $363,128 and $20,000 of expenses related to security services in 2017 for Messrs. Schwarzman and James and members of their families, respectively, perquisites and other personal benefits to the named executive officers were less than $10,000 and information regarding perquisites and other personal benefits has therefore not been included. As noted above under “— Compensation Discussion and Analysis — Compensation Elements for Named Executive Officers — Other Benefits,” we consider the expenses for security services for Messrs. Schwarzman and James to be for our benefit and appropriate business expenses rather than personal benefits for Messrs. Schwarzman and James. Mr. Schwarzman makes business and personal use of a car and driver and he and members of his family also make occasional business
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and personal use of an airplane in which we have a fractional interest and in each case he bears the full cost of such personal usage. In addition, certain Blackstone personnel administer personal matters for Mr. Schwarzman and certain matters for the Stephen A. Schwarzman Education Foundation (“SASEF”), and Mr. Schwarzman and SASEF, respectively, bear the full incremental cost to us of such personnel. Mr. James and members of his family make occasional business and personal use of an airplane in which we have a fractional interest and he bears the full incremental cost of such personal usage. There is no incremental expense incurred by us in connection with the use of any car and driver, airplane or personnel by Messrs. Schwarzman or James, as described above.
During 2017, cash distributions to our named executive officers in respect of Blackstone legacy funds and investments that were not contributed to Blackstone Holdings pursuant to the reorganization were $10,996 to Mr. Schwarzman, $593 to Mr. James, $2,196 to Mr. Hill and $182 to Ms. Solotar.
Grants of Plan-Based Awards in 2017
The following table provides information concerning unit awards granted in 2017 or, for deferred restricted common units granted under the Deferred Compensation Plan, with respect to 2017, to our named executive officers:
| Name | Grant Date | All Other Stock Awards: Number of Shares of Stock or Units (a) | Grant Date Fair Value of Stock and Option Awards (a) | |||||||||
| Stephen A. Schwarzman | — | — | $ | — | ||||||||
| Hamilton E. James | — | — | $ | — | ||||||||
| J. Tomilson Hill | 7/1/2017 | 45,785 | (b) | $ | 1,526,930 | |||||||
| 1/17/2018 | 147,376 | (c) | $ | 5,152,265 | ||||||||
| Michael S. Chae | 1/17/2018 | 793 | (c) | $ | 27,723 | |||||||
| Joan Solotar | 7/1/2017 | 30,523 | (b) | $ | 1,017,942 | |||||||
| 1/17/2018 | 50,891 | (c) | $ | 1,779,149 |
| (a) | The references to “stock” or “shares” in this table refer to deferred restricted Blackstone Holdings Partnership Units or our deferred restricted common units. |
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| (b) | Represents deferred restricted Blackstone Holdings Partnership Units granted under our 2007 Equity Incentive Plan and reflects 2016 performance. |
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| (c) | Represents deferred restricted common units granted in 2018 under the Deferred Compensation Plan for 2017 performance. (See “— Nonqualified Deferred Compensation for 2017 — Narrative to Nonqualified Deferred Compensation for 2017 Table.”) These grants are reflected in the “Stock Awards” column of the Summary Compensation Table in 2017. |
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Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards in 2017
Terms of Blackstone Holdings Partnership Units Granted in 2017 and Prior Years
Our pre-IPO owners, including our named executive officers other than Ms. Solotar, received Blackstone Holdings Partnership Units in the reorganization in exchange for the contribution of their equity interests in our operating subsidiaries to Blackstone Holdings and in exchange for their interests in carried interest relating to investments made by our carry funds prior to the date of the contribution. Ms. Solotar received grants of Blackstone Holdings Partnership Units following the commencement of her employment with us under our 2007 Equity Incentive Plan. Subject to the vesting and minimum retained ownership requirements and transfer restrictions set forth in the partnership agreements of the Blackstone Holdings Partnerships, these partnership units may be exchanged for our common units as described under “— Item 13. Certain Relationships and Related Transactions, and Director Independence — Exchange Agreement” below.
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Vesting Provisions. All of the Blackstone Holdings Partnership Units received in the reorganization by the named executive officers (other than Ms. Solotar) in exchange for the contribution of their equity interests in our operating subsidiaries to Blackstone Holdings are now fully vested. All of the Blackstone Holdings Partnership Units received in exchange for their interests in carried interest relating to investments made by our carry funds prior to the date of the contribution were fully vested. All of the Blackstone Holdings Partnership Units granted to Ms. Solotar following the commencement of her employment with us are also now fully vested.
The 11,578 deferred restricted Blackstone Holdings Partnership Units granted to Ms. Solotar in 2013 under the 2007 Equity Incentive Plan vested 20% on July 1, 2016 and 30% on July 1, 2017, and vest 50% on July 1, 2018. The 31,071 deferred restricted Blackstone Holdings Partnership Units granted to Ms. Solotar in 2014 under the 2007 Equity Incentive Plan vested 20% on July 1, 2017, and vest 30% on July 1, 2018 and 50% on July 1, 2019. The 23,558 and 70,674 deferred restricted Blackstone Holdings Partnership Units granted in 2015 to Mr. Hill and Ms. Solotar, respectively, under the 2007 Equity Incentive Plan vest 20% on July 1, 2018, 30% on July 1, 2019 and 50% on July 1, 2020. The 54,986 and 39,276 deferred restricted Blackstone Holdings Partnership Units granted to Mr. Hill and Ms. Solotar, respectively, in 2016 under the 2007 Equity Incentive Plan vest 20% on July 1, 2019, 30% on July 1, 2020 and 50% on July 1, 2021. The 981,883 deferred restricted Blackstone Holdings Partnership Units granted to Mr. Chae in 2016 under the 2007 Equity Incentive Plan vest annually in substantially equal installments over six years beginning on July 1, 2019. The 45,785 and 30,523 deferred restricted Blackstone Holdings Partnership Units granted to Mr. Hill and Ms. Solotar, respectively, in 2017 under the 2007 Equity Incentive Plan vest 20% on July 1, 2020, 30% on July 1, 2021 and 50% on July 1, 2022.
Except as described below, unvested deferred restricted Blackstone Holdings Partnership Units are generally forfeited upon termination of employment. With respect to Ms. Solotar, the deferred restricted Blackstone Holdings Partnership Units granted to her in 2013 and 2014 will become fully vested if she is terminated by us without cause. In addition, upon the death or permanent disability of a named executive officer, all of his or her unvested deferred restricted Blackstone Holdings Partnership Units held at that time will vest immediately. In connection with a named executive officer’s termination of employment due to qualifying retirement, with respect to unvested deferred restricted Blackstone Holdings Partnership Units granted in 2014 and prior years, 50% of such units will generally be entitled to accelerated vesting and, with respect to unvested deferred restricted Blackstone Holdings Partnership Units granted in 2015 and subsequent years, 50% of such units will continue to vest and be delivered over the vesting period, subject to forfeiture if the named executive officer violates any applicable provision of his employment agreement or engages in any competitive activity (as such term is defined in the applicable award agreement). (See “Non-Competition and Non-Solicitation Agreements — Retirement.”) Further, in the event of a change in control (defined in the Blackstone Holdings partnership agreements as the occurrence of any person becoming the general partner of The Blackstone Group L.P. other than a person approved by the current general partner), any Blackstone Holdings Partnership Units and deferred restricted Blackstone Holdings Partnership Units will automatically be deemed vested as of immediately prior to such change in control.
All vested and unvested Blackstone Holdings Partnership Units and deferred restricted Blackstone Holdings Partnership Units (and our common units received in exchange for such Blackstone Holdings Partnership Units) held by a named executive officer will be immediately forfeited in the event he materially breaches any of his restrictive covenants set forth in the non-competition and non-solicitation agreement outlined under “Non-Competition and Non-Solicitation Agreements” or his service is terminated for cause. Notwithstanding the foregoing, Mr. Schwarzman will not be required to forfeit more than 25% of the units held by him as of the date of his amended and restated founding member agreement.
Cash Distribution Equivalents. All unvested Blackstone Holdings Partnership Units and deferred restricted Blackstone Holdings Partnership Units are entitled to the payment of current cash distribution equivalents. In accordance with the SEC’s rules, the current cash distribution equivalents are not required to be reported in the Summary Compensation Table because the amounts of future cash distributions are factored into the grant date fair value of the awards.
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Minimum Retained Ownership Requirements. For units granted in 2014 and prior years, while employed by us and generally for one year following the termination of employment, each of our named executive officers (except as otherwise provided below) will be required to continue to hold (and may not transfer) at least 25% of all vested units (other than vested units awarded under our Deferred Compensation Plan) received by him or her; provided that, with respect to vested units received in connection with the reorganization, such percentage is reduced to 12.5% upon qualifying retirement. For units granted in 2015 and subsequent years each of our named executive officers (except as otherwise provided below) will be required to hold 25% of their vested units (other than vested units awarded under our Deferred Compensation Plan) until the earlier of (1) ten years after the applicable vesting date and (2) one year following termination of employment. The requirement that one continue to hold at least 25% of such vested units is subject to the qualification in Mr. Schwarzman’s case that in no event will he be required to hold units having a market value greater than $1.5 billion or hold units following termination of employment. Each of our named executive officers is in compliance with these minimum retained ownership requirements.
Transfer Restrictions. None of our named executive officers may transfer Blackstone Holdings Partnership Units other than pursuant to transactions or programs approved by our general partner.
This transfer restriction applies to sales, pledges of Blackstone Holdings Partnership Units, grants of options, rights or warrants to purchase Blackstone Holdings Partnership Units or swaps or other arrangements that transfer to another, in whole or in part, any of the economic consequences of ownership of the Blackstone Holdings Partnership Units other than as approved by our general partner. We expect that our general partner will approve pledges or transfers to personal planning vehicles beneficially owned by the families of our pre-IPO owners and charitable gifts, provided that the pledgee, transferee or donee agrees to be subject to the same transfer restrictions
(except as specified above with respect to Mr. Schwarzman). Transfers to Blackstone are also exempt from the transfer restrictions.
The transfer restrictions set forth above will continue to apply generally for one year following the termination of employment of a named executive officer other than Mr. Schwarzman for any reason, except that the transfer restrictions set forth above will lapse upon death or permanent disability. The transfer restrictions will lapse in the event of a change in control (as defined above).
The Blackstone Holdings Partnership Units received by other Blackstone personnel in the reorganization and pursuant to the 2007 Equity Incentive Plan are also generally subject to the vesting and minimum retained ownership requirements and transfer restrictions applicable to our named executive officers other than Mr. Schwarzman, although non-senior managing directors were also generally subject to vesting in respect of a portion of the Blackstone Holdings Partnership Units received by such personnel in the reorganization in exchange for their interests in carried interest.
Schwarzman Founding Member Agreement
Upon the consummation of our initial public offering, we entered into a founding member agreement with Mr. Schwarzman. Although Mr. Schwarzman has informed the conflicts committee of the board of directors of our general partner that he has no current plan to retire, on March 1, 2018, we amended and restated this agreement, with the approval of the conflicts committee advised by independent counsel, to address certain retirement benefits to be received by Mr. Schwarzman. Mr. Schwarzman’s agreement provides that he will remain our Chairman and Chief Executive Officer (or, as determined by Mr. Schwarzman, our Chairman or Executive Chairman) while continuing service with us and requires him to give us six months’ prior written notice of intent to terminate service with us. The agreement provides that following retirement (or, if applicable, the date on which he ceases active service as a result of his permanent disability), Mr. Schwarzman will be provided with specified retirement benefits for the remainder of his life, including that he be permitted to retain his then current office and continue to be provided with administrative support, access to office services and a car and driver. Mr. Schwarzman will also continue to receive health benefits following his retirement until his death, subject to his continuing payment of the related health insurance premiums consistent with current policies. Finally, Mr. Schwarzman will also receive
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reimbursement for travel costs (including travel on personal aircraft) for Blackstone related business functions, annual home and personal security benefits, reasonable access to our Chief Legal Officer, reasonable access to certain events, legal representation for Blackstone related matters, and, subject to his continuing payment of costs and expenses related thereto, he will continue to be provided with offices, technology and support for his family office team at levels consistent with current practice. The agreement provides that, following Mr. Schwarzman’s termination of service, he or related entities will remain entitled to receive awards of carried interest at reduced levels until the later of February 14, 2027 or the date of Mr. Schwarzman’s death. The profit sharing percentage for any carried interest awarded in new funds launched after Mr. Schwarzman’s termination of service shall generally be set at 50% of the profit sharing percentage Mr. Schwarzman held in the most recent corresponding predecessor fund prior to his termination of employment or, in the case of new funds without a corresponding predecessor fund prior to Mr. Schwarzman’s termination of service, a profit sharing percentage set at 50% of the median of the aggregate profit sharing percentages held by Mr. Schwarzman at the time of his termination of service. While currently Mr. Schwarzman is entitled to invest in or alongside our investment funds without being subject to management fees or carried interest, this has been extended to continue until ten years following the date of Mr. Schwarzman’s death as to Mr. Schwarzman, his estate and related entities.
Senior Managing Director Agreements
Upon the consummation of our initial public offering, we entered into substantially similar senior managing director agreements with each of our named executive officers and other senior managing directors other than our founder and Ms. Solotar. Senior managing directors who have joined the firm after our initial public offering (including Ms. Solotar) have also entered into senior managing director agreements. The agreements generally provide that each senior managing director will devote substantially all of his or her business time, skill, energies and attention to us in a diligent manner. Each senior managing director will be paid distributions and benefits in amounts determined by Blackstone from time to time in its sole discretion. The agreements require us to provide the senior managing director with 90 days’ prior written notice prior to terminating his or her service with us (other than a termination for cause). Additionally, the agreements require each senior managing director to give us 90 days’ prior written notice of intent to terminate service with us and require the senior managing director to be placed on a 90-day period of “garden leave” following the senior managing director’s termination of service (as further described under the caption “— Non-Competition and Non-Solicitation Agreements” below).
Outstanding Equity Awards at 2017 Fiscal Year End
The following table provides information regarding outstanding unvested equity awards made to our named executive officers as of December 31, 2017.
| Stock Awards (a) | ||||||||
| Name | Number of Shares or Units of Stock That Have Not Vested | Market Value of Shares or Units of Stock That Have Not Vested (b) | ||||||
| Stephen A. Schwarzman | — | $ | — | |||||
| Hamilton E. James (c) | — | $ | — | |||||
| J. Tomilson Hill (c) | 207,629 | $ | 6,648,281 | |||||
| Michael Chae | 1,003,443 | $ | 32,132,576 | |||||
| Joan Solotar | 296,518 | $ | 9,644,126 |
| (a) | The references to “stock” or “shares” in this table refer to unvested deferred restricted Blackstone Holdings Partnership Units and unvested deferred restricted common units granted under the Deferred Compensation Plan (including deferred restricted common units granted to Messrs. Hill and Chae and Ms. Solotar in 2018 in respect of 2017 performance and the unvested premium portion of deferred restricted common units granted to Mr. Hill under the Deferred Compensation Plan). The vesting terms of these awards are described under the |
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| captions “Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards in 2017 — Terms of Blackstone Holdings Partnership Units Granted in 2017 and Prior Years” above and “— Nonqualified Deferred Compensation for 2017 — Narrative to Nonqualified Deferred Compensation for 2017 Table” below. |
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| (b) | The dollar amounts shown under this column were calculated by multiplying the number of unvested deferred restricted Blackstone Holdings Partnership Units or unvested deferred restricted common units held by the named executive officer by the closing market price of $32.02 per Blackstone common unit on December 29, 2017, the last trading day of 2017, other than the deferred restricted common units granted in 2018 in respect of 2017 performance, which are valued as of the date of their grant. |
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| (c) | This table does not reflect (1) undelivered deferred restricted common units that were granted to Messrs. James and Hill in 2015 pursuant to the Deferred Compensation Plan in respect of 2014 performance that were considered vested on the date of grant due to their retirement eligibility, (2) undelivered deferred restricted common units that were granted to Mr. Hill pursuant to the Deferred Compensation Plan in 2018 in respect of 2017 performance, in 2017 in respect of 2016 performance and in 2016 in respect of 2015 performance that, in each case, were considered vested on the date of grant due to his retirement eligibility and (3) mandatorily deferred and vested, but undelivered, deferred restricted common units that were granted to Mr. Hill pursuant to the Deferred Compensation Plan in respect of 2013. These deferred restricted common units are reflected in the Nonqualified Deferred Compensation for 2017 Table below. |
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Option Exercises and Stock Vested in 2017
The following table provides information regarding the number of outstanding initially unvested equity awards made to our named executive officers that vested during 2017 or, for deferred restricted common units granted to Mr. Hill under the Deferred Compensation Plan, with respect to 2017:
| Stock Awards (a) | ||||||||
| Name | Number of Shares Acquired on Vesting | Value Realized on Vesting (b) | ||||||
| Stephen A. Schwarzman | — | $ | — | |||||
| Hamilton E. James | — | $ | — | |||||
| J. Tomilson Hill (c) | 170,269 | $ | 5,915,730 | |||||
| Michael S. Chae | — | $ | — | |||||
| Joan Solotar | 52,864 | $ | 1,653,412 |
| (a) | The references to “stock” or “shares” in this table refer to deferred restricted Blackstone Holdings Partnership Units and our deferred restricted common units. |
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| (b) | The value realized on vesting is based on the closing market prices of our common units on the day of vesting. |
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| (c) | For Mr. Hill, includes 147,376 deferred restricted common units granted pursuant to the Deferred Compensation Plan in 2018 in respect of 2017 performance, with a value realized on vesting of $5,152,265, which were all considered vested and undelivered on the date of grant due to Mr. Hill’s retirement eligibility. These deferred restricted common units are scheduled to be delivered in equal annual installments over the three year deferral period and are reflected in the Nonqualified Deferred Compensation for 2017 Table below. |
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Nonqualified Deferred Compensation for 2017
The following table provides information with respect to (1) undelivered deferred restricted common units that were granted to Messrs. James and Hill in 2015 pursuant to the Deferred Compensation Plan in respect of 2014 performance that were considered vested on the date of grant due to their retirement eligibility, (2) undelivered deferred restricted common units that were granted to Mr. Hill pursuant to the Deferred Compensation Plan in 2018 in respect of 2017 performance, in 2017 in respect of 2016 performance and in 2016 in respect of 2015 performance that, in each case, were considered vested on the date of grant due to his retirement eligibility and (3) mandatorily
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deferred and vested, but undelivered, deferred restricted common units that were granted to Mr. Hill pursuant to the Deferred Compensation Plan in respect of 2013.
| Name | Executive Contributions in 2017 | Registrant Contributions in 2017 (a) | Aggregate Earnings (Losses) in 2017 (b) | Aggregate Withdrawals/ Distributions (c) | Aggregate Balance at December 31, 2017 (d) | |||||||||||||||
| Stephen A. Schwarzman | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||
| Hamilton E. James | $ | — | $ | — | $ | 94,008 | $ | 244,586 | $ | 281,761 | ||||||||||
| J. Tomilson Hill | $ | — | $ | 5,152,265 | $ | 4,989,379 | $ | 12,755,829 | $ | 22,178,196 | ||||||||||
| Michael S. Chae | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||
| Joan Solotar | $ | — | $ | — | $ | — | $ | — | $ | — |
| (a) | This column represents the mandatory deferral of a portion of Mr. Hill’s annual cash bonus for 2017 into 147,376 deferred restricted common units pursuant to our Deferred Compensation Plan. These units were granted to Mr. Hill in 2018 in respect of 2017 performance. These deferred restricted common units are deemed vested due to retirement eligibility, but will be delivered in equal annual installments over three years. This amount is also reflected in the “Stock Awards” column of the Summary Compensation Table for the last completed fiscal year (see footnote (b) to the Summary Compensation Table). |
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| (b) | This column represents (1) the earnings/(losses) during 2017 on deferred restricted common units granted to Messrs. James and Hill pursuant to our Deferred Compensation Plan through the earlier of their delivery or December 31, 2017 and (2) the payment of current cash distribution equivalents on deferred restricted common units granted pursuant to the Deferred Compensation Plan to Messrs. James and Hill in 2015 in respect of 2014 and to Mr. Hill in 2016 in respect of 2015 and in 2017 in respect of 2016 through the earlier of their delivery or December 31, 2017. No portion of any earnings would be considered above-market or preferential and, accordingly, no earnings are reflected in the Summary Compensation Table. |
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| (c) | This column represents (1) the value of 6,832 and 364,312 deferred common units that were delivered to Messrs. James and Hill, respectively, in 2017 based on the closing market price per Blackstone common unit on the date(s) of delivery and (2) the payment of current cash distribution equivalents on deferred restricted common units granted pursuant to the Deferred Compensation Plan to Messrs. James and Hill in 2015 in respect of 2014 and to Mr. Hill in 2016 in respect of 2015 and in 2017 in respect of 2016. |
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| (d) | Represents the value as of December 31, 2017 of 6,832 deferred restricted common units granted to Mr. James and 679,104 deferred restricted common units granted to Mr. Hill. With respect to Messrs. James and Hill, $226,431 and $17,517,729 has been previously reported in the “Stock Awards” column of the Summary Compensation Table, respectively. The values set forth in this column are based on the closing market price of $32.02 per Blackstone common units on December 29, 2017, other than the units granted in 2018 in respect of 2017 performance, which are valued as of the date of their grant. |
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Narrative to Nonqualified Deferred Compensation for 2017 Table
In 2007, we established our Deferred Compensation Plan (which we also refer to as our “Bonus Deferral Plan”) for certain eligible employees of Blackstone and certain of its affiliates in order to provide such eligible employees with a pre-tax deferred incentive compensation opportunity and to enhance the alignment of interests between such eligible employees and Blackstone and its affiliates. The Deferred Compensation Plan is an unfunded, nonqualified deferred compensation plan which provides for the automatic, mandatory deferral of a portion of each participant’s annual cash bonus payment.
At the end of each year, the Plan Administrator (as defined in the Deferred Compensation Plan) selects plan participants in its sole discretion and notifies such individuals that they have been selected to participate in the Deferred Compensation Plan for such year. Participation is mandatory for those employees selected by the Plan Administrator to be participants. An individual, if selected, may not decline to participate in the Deferred Compensation Plan and an individual who is not so selected may not elect to participate in the Deferred Compensation Plan. The selection of participants is made on an annual basis; an individual selected to participate in
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the Deferred Compensation Plan for a given year may not necessarily be selected to participate in a subsequent year. For 2017, all employees other than Mr. Schwarzman and Mr. James were deemed eligible to participate in the Deferred Compensation Plan, with the deferred amount (if any) determined in accordance with the table described below. Accordingly, Messrs. Hill and Chae and Ms. Solotar each participated in the Deferred Compensation Plan for 2017.
In respect of the deferred portion of his or her annual cash bonus payment, each participant receives deferral units which represent rights to receive in the future a specified amount of common units or Blackstone Holdings Partnership Units or other equity-based awards under our 2007 Equity Incentive Plan, subject to vesting provisions described below. The amount of each participant’s annual cash bonus payment deferred under the Deferred Compensation Plan is calculated pursuant to a deferral rate table using the participant’s total annual incentive compensation, which generally includes such participant’s annual cash bonus payment and any incentive fees earned in connection with our investment funds, and is subject to certain adjustments, including reductions for mandatory contributions to our investment funds. For deferrals of 2017 annual cash bonus payments, the deferral percentage was calculated on the basis set forth in the following table (or such other table that may be adopted by the Plan Administrator).
| Portion of Annual Incentive | Marginal Deferral Rate Applicable to Such Portion | Effective Deferral Rate for Entire Annual Bonus (a) | ||||||
| $0 - 100,000 | 0 | % | 0.0 | % | ||||
| $100,001 - 200,000 | 15 | % | 7.5 | % | ||||
| $200,001 - 500,000 | 20 | % | 15.0 | % | ||||
| $500,001 - 750,000 | 30 | % | 20.0 | % | ||||
| $750,001 - 1,250,000 | 40 | % | 28.0 | % | ||||
| $1,250,001 - 2,000,000 | 45 | % | 34.4 | % | ||||
| $2,000,001 - 3,000,000 | 50 | % | 39.6 | % | ||||
| $3,000,001 - 4,000,000 | 55 | % | 43.4 | % | ||||
| $4,000,001 - 5,000,000 | 60 | % | 46.8 | % | ||||
| $5,000,000 + | 65 | % | 52.8 | % |
| (a) | Effective deferral rates are shown for illustrative purposes only and are based on an annual cash payment equal to the maximum amount in the range shown in the far left column (which is assumed to be $7,500,000 for the last range shown). |
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Mandatory Deferral Awards. Generally, deferral units are satisfied by delivery of our common units in equal annual installments over the deferral period, which was three years for grants made in respect of years prior to 2012 and four years for grants made in respect of years 2012 and 2013 (with no partial-year delivery). In 2015, the Deferred Compensation Plan was amended to return the deferral period to three years for grants made in respect of 2014 and subsequent years. Delivery of our common units underlying vested deferral units is delayed until anticipated trading window periods to better facilitate the participant’s liquidity to meet tax obligations. If the participant’s employment is terminated for cause, the participant’s undelivered deferral units (vested and unvested) will be immediately forfeited. Upon a change in control or termination of the participant’s employment because of death, any undelivered deferral units (vested and unvested) will become immediately deliverable. With respect to deferral units granted in respect of 2013 and prior years, if the participant’s employment is terminated without cause or because of resignation, qualifying retirement or disability, the participant’s deferral units will continue to be delivered over the applicable deferral period. However, if, following a termination of employment without cause or because of resignation, qualifying retirement or disability, the participant violates any applicable provision of his or her employment agreement (or, in the case of a resignation, engages in a competitive business (as such term is defined in his or her employment agreement)), then any deferral units that remain undelivered as of the date of such violation, will be immediately forfeited. In 2015, the Deferred Compensation Plan was amended to modify the terms
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of the mandatorily deferred restricted common units to provide that unvested bonus deferral awards in respect of 2014 and subsequent years will now be forfeited upon resignation, will immediately vest and be delivered if the participant’s employment is terminated without cause or because of disability and, in connection with a qualifying retirement, will continue to vest and be delivered over the applicable deferral period, subject to forfeiture if the participant violates any applicable provision of his or her employment agreement or engages in any competitive activity (as such term is defined in the Deferred Compensation Plan).
The 20,767 and 38,534 deferred restricted common units granted under the Deferred Compensation Plan to Mr. Chae and Ms. Solotar, respectively, in 2017 for 2016 performance vested 33.3% on January 1, 2018 and vest 33.3% on January 1, 2019 and 33.4% on January 1, 2020. The 793 and 50,981 deferred restricted common units granted under the Deferred Compensation Plan to Mr. Chae and Ms. Solotar, respectively, in 2018 for 2017 performance vest 33.3% on January 1, 2019, 33.3% on January 1, 2020 and 33.4% on January 1, 2021.
Premium Awards. Prior to deferrals in respect of 2014 performance, each plan participant was eligible to receive a premium award in the amount equal to a percentage of his or her deferral amount. The percentage was selected by the Plan Administrator. Generally, except in respect of 2012, the premium award percentage was 20%. Generally, the premium award percentage in respect of 2012 was 25%. The deferral amount plus the premium award yielded the total amount of deferral units that a participant was awarded for any given year. The entire premium portion of such deferral units is, with specified exceptions, subject to continued employment of such participant through the end of the applicable deferral period and vests and is delivered at the end of such deferral period. As is the case with respect to the mandatory deferral units, delivery of our common units underlying the vested premium portion of the participant’s deferral units is delayed until anticipated trading window periods to better facilitate the participant’s liquidity to meet tax obligations. If the participant’s employment is terminated for cause, the premium portion of the participant’s undelivered deferral units (vested and unvested) will be immediately forfeited. In connection with a participant’s termination of employment without cause or because of resignation, the entire unvested premium portion of the participant’s deferral units will be immediately forfeited. In connection with a participant’s termination of employment due to qualifying retirement, 50% of the unvested premium portion of the participant’s deferral units will continue to vest at the end of the applicable deferral period and be delivered on the applicable delivery date. In connection with a participant’s termination of employment due to disability, the entire unvested premium portion of the participant’s deferral units will continue to vest at the end of the applicable deferral period and be delivered on the applicable delivery date. However, if, following a termination of employment because of qualifying retirement or disability, the participant violates any applicable provision of his or her employment agreement, including specified restrictive covenants such as a non-compete, then any such deferral units that remain undelivered as of the date of such violation will be immediately forfeited. Upon a change in control or termination of the participant’s employment because of death, the entire unvested premium portion of the participant’s deferral units will immediately vest and become deliverable. In 2015, the Deferred Compensation Plan was amended to replace the premium award component of the plan with the payment of current cash distribution equivalents on both vested and unvested deferred awards beginning with awards granted in 2015 in respect of 2014. As a result, no premium awards were granted in 2016 in respect of 2015 performance or thereafter.
The remaining 82,926 unvested deferred restricted common units granted to Mr. Hill as premium awards under the Deferred Compensation Plan vested on January 13, 2018.
Potential Payments Upon Termination of Employment or Change in Control
Upon a change of control event where any person (other than a person approved by our general partner) becomes our general partner or a termination of employment because of death, any unvested deferred restricted Blackstone Holdings Partnership Units or unvested deferred restricted common units held by any of our named executive officers will automatically be deemed vested as of immediately prior to such occurrence of such change of control or such termination of employment. Had such a change of control or such a termination of employment occurred on December 29, 2017, the last business day of 2017, each of our named executive officers would have vested in the following numbers of deferred restricted Blackstone Holdings Partnership Units and deferred restricted
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common units, having the following values based on our closing market price of $32.02 per Blackstone common unit on December 29, 2017, other than the deferred restricted common units granted in 2018 in respect of 2017 performance, which are valued as of the date of their grant: Messrs. Schwarzman and James had no outstanding unvested units at December 31, 2017; Mr. Hill — 124,703 deferred restricted Blackstone Holdings Partnership Units and 82,926 deferred restricted common units, representing the premium portion of his deferred restricted common units, with an aggregate value of $6,648,281; Mr. Chae — 981,883 deferred restricted Blackstone Holdings Partnership Units and 21,560 deferred restricted common units with an aggregate value of $32,132,576 and Ms. Solotar — 172,729 deferred restricted Blackstone Holdings Partnership Units and 123,789 deferred restricted common units with an aggregate value of $9,644,126. In addition, the Deferred Compensation Plan provides that upon a change in control or termination of the participant’s employment because of death, any fully vested but undelivered deferred restricted common units will become immediately deliverable. Therefore, had a change of control or such termination of employment occurred on December 29, 2017, Mr. James and Mr. Hill would also have been entitled to accelerated delivery of the 6,832 and 575,446 deferred restricted common units, respectively, that were granted to them pursuant to the Deferred Compensation Plan, and were considered vested on the date of grant due to their retirement eligibility. Mr. Hill would also have been entitled to accelerated delivery of his 103,658 mandatorily deferred and vested, but undelivered, deferred restricted common units granted to him under the Deferred Compensation Plan in respect of 2013 that were outstanding as of December 29, 2017.
Upon a termination of employment because of disability, any unvested deferred restricted Blackstone Holdings Partnership Units or unvested deferred restricted common units granted under the Deferred Compensation Plan in respect of 2014 and subsequent years will also automatically be deemed vested. However, with respect to the premium portion of deferred restricted common units granted under the Deferred Compensation Plan in respect of 2013 and prior years, in connection with a participant’s termination of employment due to disability, such deferral units will continue to vest at the end of the applicable deferral period and be delivered on the applicable delivery date, subject to the participant not violating any applicable provision of his or her employment agreement. Therefore, had a termination of employment because of disability occurred on December 29, 2017, each of our named executive officers would have vested in the numbers of deferred restricted Blackstone Holdings Partnership Units and deferred restricted common units set forth in the paragraph immediately above, having the values set forth above, but Mr. Hill would not have immediately vested in his 82,926 unvested deferred restricted common units, which represent the premium portion of his deferred restricted common units. In addition, Mr. James and Mr. Hill would also have been entitled to accelerated delivery in the numbers of deferred restricted common units set forth in the paragraph immediately above that were granted to them pursuant to the Deferred Compensation Plan, which are considered vested due to their retirement eligibility.
In connection with a named executive officer’s termination of employment due to qualifying retirement, a named executive officer will generally immediately vest in 50% of their unvested deferred restricted Blackstone Holdings Partnership Units granted in 2014 and prior years and, with respect to unvested deferred restricted Blackstone Holdings Partnership Units granted in 2015, 2016 and 2017, 50% of such units will continue to vest and be delivered over the vesting period, subject to forfeiture if the named executive officer violates any applicable provision of his employment agreement or engages in any competitive activity (as such term is defined in the applicable award agreement). (See “Non-Competition and Non-Solicitation Agreements — Retirement.”) As of December 29, 2017, Mr. James and Mr. Hill were retirement eligible. Mr. James had no outstanding unvested units at December 29, 2017 and all of Mr. Hill’s unvested deferred restricted Blackstone Holdings Partnership Units as of December 29, 2017 were granted after 2014. If Mr. Hill had retired on December 29, 2017, then the Deferred Compensation Plan provides that 50% of the unvested premium portion of his deferred restricted common units would have continued to vest at the end of the applicable deferral period and would have been delivered on the applicable delivery date, subject to forfeiture of any deferral units which remain undelivered as of the date of the breach of any applicable provision of his employment agreement.
Upon a termination of Mr. Chae’s and Ms. Solotar’s employment without cause, the deferred restricted common units granted to them under the Deferred Compensation Plan in respect of 2017, 2016, 2015 and 2014, as applicable, will become fully vested. Upon a termination of Ms. Solotar’s employment without cause, the unvested
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deferred restricted Blackstone Holdings Partnership Units granted to her in 2013 and 2014 will become fully vested. Had such a termination of employment occurred on December 29, 2017, the last business day of 2017, each of Mr. Chae and Ms. Solotar would have vested in the following numbers of deferred restricted Blackstone Holdings Partnership Units and deferred restricted common units, respectively, having the following values based on our closing market price of $32.02 per Blackstone common unit on December 29, 2017, other than the deferred restricted common units granted in 2018 in respect of 2017 performance, which are valued as of the date of their grant: Mr. Chae — 21,560 deferred restricted common units with a value of $692,683 and Ms. Solotar — 31,133 deferred restricted Blackstone Holdings Partnership Units with a value of $996,879 and 123,789 deferred restricted common units with an aggregate value of $4,113,343.
Upon a termination without cause, Mr. James and Mr. Hill would have been entitled to accelerated delivery in the numbers of deferred restricted common units set forth above in the first paragraph of this section that were granted to them pursuant to the Deferred Compensation Plan, and were considered vested on the date of grant due to their retirement eligibility.
In addition, except as described below, unvested carried interest in our carry funds is generally forfeited upon termination of employment. Upon the death or disability of any named executive officer who participates in the carried interest of our carry funds, the named executive officer will be deemed 100% vested in any unvested portion of carried interest in our carry funds. Furthermore, any named executive officer that is retirement eligible will automatically vest in 50% of their otherwise unvested carried interest allocation upon retirement. (See “— Non-Competition and Non-Solicitation Agreements — Retirement.”) As of December 29, 2017, Mr. James and Mr. Hill were retirement eligible for purposes of their carried interest allocations.
In addition, pursuant to Mr. Schwarzman’s amended and restated founding member agreement described above under “Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards in 2017 — Schwarzman Founding Member Agreement,” following retirement and for the remainder of his life, Mr. Schwarzman will be provided with specified retirement benefits, including a car and driver, retention of his current office, administrative support and annual home and personal security benefits. The value of such retirement benefits is estimated at approximately $930,000 per year. We have not assigned a value to the entitlements of Mr. Schwarzman and his estate and related entities to receive carried interest in new funds or to invest in our investment funds fee free following his termination of service as such value cannot be reasonably estimated. We anticipate that any incremental cost to us with respect to the other personal benefits to which Mr. Schwarzman is entitled following his retirement will be de minimis.
Non-Competition and Non-Solicitation Agreements
Upon the consummation of our initial public offering, we entered into a non-competition and non-solicitation agreement with our founder, our other senior managing directors, most of our other professional employees and specified senior administrative personnel to whom we refer collectively as “Contracting Employees.” Contracting Employees who have joined the firm after our initial public offering have also executed non-competition and non-solicitation agreements. The following are descriptions of the material terms of each such non-competition and non-solicitation agreement. With the exception of the few differences noted in the description below, the terms of each non-competition and non-solicitation agreement are generally in relevant part similar.
Full-Time Commitment. Each Contracting Employee agrees to devote substantially all of his or her business time, skill, energies and attention to his or her responsibilities at Blackstone in a diligent manner. Our founder Mr. Schwarzman has agreed that our business will be his principal business pursuit and that he will devote such time and attention to the business of the firm as may be reasonably requested by us.
Confidentiality. Each Contracting Employee is required, whether during or after his or her employment with us, to protect and only use “confidential information” in accordance with strict restrictions placed by us on its use and disclosure. (Every employee of ours is subject to similar strict confidentiality obligations imposed by our Code of Conduct applicable to all Blackstone personnel.)
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Notice of Termination. Each Contracting Employee is required to give us prior written notice of his or her intention to leave our employ — six months in the case of Mr. Schwarzman, 90 days for all of our other senior managing directors and between 30 and 60 days in the case of all other Contracting Employees.
Garden Leave. Upon his or her voluntary departure from our firm, a Contracting Employee is required to take a prescribed period of “garden leave.” The period of garden leave is 90 days for our non-founding senior managing directors and between 30 and 60 days for all other Contracting Employees. During this period the Contracting Employee will continue to receive some of his or her Blackstone compensation and benefits, but is prohibited from commencing employment with a new employer until the garden leave period has expired. The period of garden leave for each Contracting Employee will run coterminously with the non-competition Restricted Period that applies to him or her as described below. Our founder Mr. Schwarzman is subject to non-competition covenants but not garden leave requirements.
Non-Competition. During the term of employment of each Contracting Employee, and during the Restricted Period (as such term is defined below) immediately thereafter, he or she will not, directly or indirectly:
| • | engage in any business activity in which we operate, including any competitive business, |
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| • | render any services to any competitive business, or |
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| • | acquire a financial interest in or become actively involved with any competitive business (other than as a passive investor holding minimal percentages of the stock of public companies). |
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“Competitive business” means any business that competes, during the term of employment through the date of termination, with our business, including any businesses that we are actively considering conducting at the time of the Contracting Employee’s termination of employment, so long as he or she knows or reasonably should have known about such plans, in any geographical or market area where we or our affiliates provide our products or services.
Non-Solicitation. During the term of employment of each Contracting Employee, and during the Restricted Period immediately thereafter, he or she will not, directly or indirectly, in any manner solicit any of our employees to leave their employment with us, or hire any such employee who was employed by us as of the date of his or her termination or who left employment with us within one year prior to or after the date of his or her termination. Additionally, each Contracting Employee may not solicit or encourage to cease to work with us any consultant or senior advisers that he or she knows or should know is under contract with us.
In addition, during the term of employment of each Contracting Employee, and during the Restricted Period immediately thereafter, he or she will not, directly or indirectly, in any manner solicit the business of any client or prospective client of ours with whom he or she, employees reporting to him or her, or anyone whom he or she had direct or indirect responsibility over had personal contact or dealings on our behalf during the three-year period immediately preceding his or her termination. Contracting Employees who are employed in our asset management businesses are subject to a similar non-solicitation covenant with respect to investors and prospective investors in our investment funds.
Non-Interference and Non-Disparagement. During the term of employment of each Contracting Employee, and during the Restricted Period immediately thereafter, he or she may not interfere with business relationships between us and any of our clients, customers, suppliers or partners. Each Contracting Employee is also prohibited from disparaging us in any way.
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Restricted Period. For purposes of the foregoing covenants, the “Restricted Period” will be:
| Covenant | Stephen A. Schwarzman | Other Senior Managing Directors | Other Contracting Employees | |||
| Non-competition | Two years after termination of employment. | One year (six months for senior managing directors who are eligible to retire, as defined below) after termination of employment. | Between 90 days and six months after termination of employment. | |||
| Non-solicitation of Blackstone employees | Two years after termination of employment. | Two years after termination of employment. | Generally one year after termination of employment. | |||
| Non-solicitation of Blackstone clients or investors | Two years after termination of employment. | One year after termination of employment. | Generally between six months and one year after termination of employment. | |||
| Non-interference with business relationships | Two years after termination of employment. | One year after termination of employment. | Generally between six months and one year after termination of employment. |
Retirement. Blackstone personnel are eligible to retire if they have satisfied either of the following tests: (a) one has reached the age of 65 and has at least five full years of service with our firm; or (b) generally one has reached the age of 55 and has at least five full years of service with our firm and the sum of his or her age plus years of service with our firm totals at least 65.
Intellectual Property. Each Contracting Employee is subject to customary intellectual property covenants with respect to works created, invented, designed or developed by him or her that are relevant to or implicated by his or her employment with us.
Specific Performance. In the case of any breach of the confidentiality, non-competition, non-solicitation, non-interference, non-disparagement or intellectual property provisions by a Contracting Employee, the breaching individual agrees that we will be entitled to seek equitable relief in the form of specific performance, restraining orders, injunctions or other equitable remedies.
Pay Ratio Disclosure
As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(u) of Regulation S-K, we are providing the following information regarding the ratio of the annual total compensation for our principal executive officer to the median of the annual total compensation of all our employees (other than our principal executive officer) (the “CEO Pay Ratio”). Our CEO Pay Ratio is a reasonable estimate calculated in a manner consistent with Item 402(u). However, due to the flexibility afforded by Item 402(u) in calculating the CEO Pay Ratio, our CEO Pay Ratio may not be comparable to the CEO pay ratios presented by other companies.
As of December 31, 2017, we employed approximately 2,360 people, including our 136 senior managing directors. We identified our median employee using our global employee population as of December 31, 2017. To identify our median employee, we used annual base salary and bonuses earned in 2017. We believe this consistently applied compensation measure reasonably reflects annual compensation across our employee base. Application of our consistently applied compensation measure identified eighteen employees with the same total annual base salary
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and cash bonus earned in 2017. We identified our median employee from among these employees by reviewing the components of their annual total compensation and selecting the employee whose title, tenure and compensation characteristics most accurately reflected the compensation of a typical employee. After identifying our median employee, we calculated the median employee’s annual total compensation in accordance with the requirements of the Summary Compensation Table. For 2017, the annual total compensation for Mr. Schwarzman, our principal executive officer, was $125,519,429 and our median employee’s annual total compensation was $218,449. Accordingly, annual total compensation of our principal executive officer was approximately five hundred and seventy-five times the annual total compensation of our median employee.
Director Compensation in 2017
No additional remuneration is paid to our employees for services as a director of our general partner. In 2017, each of our non-employee directors received an annual cash retainer of $150,000 and a grant of deferred restricted common units equivalent in value to $150,000, with a grant date fair value determined as described in footnote (a) to the first table below. An additional $30,000 annual cash retainer was paid to the Chairman of the Audit Committee during 2017. An additional $25,000 annual cash retainer was paid to Mr. Light in connection with his service on the executive committee of Blackstone Group International Partners LLP.
The following table provides the director compensation for our directors for 2017:
| Name | Fees Earned or Paid in Cash | Stock Awards (a) (b) | Total | |||||||||
| Bennett J. Goodman (c) | $ | — | $ | — | $ | — | ||||||
| Jonathan D. Gray (c) | $ | — | $ | — | $ | — | ||||||
| James W. Breyer | $ | 150,000 | $ | 151,433 | $ | 301,433 | ||||||
| Peter T. Grauer (d) | $ | 150,000 | $ | 150,151 | $ | 300,151 | ||||||
| Richard Jenrette (e) | $ | 150,000 | $ | 291,081 | $ | 441,081 | ||||||
| Rochelle B. Lazarus | $ | 150,000 | $ | 150,665 | $ | 300,665 | ||||||
| Jay O. Light | $ | 175,000 | $ | 150,026 | $ | 325,026 | ||||||
| The Right Honorable Brian Mulroney | $ | 150,000 | $ | 149,836 | $ | 299,836 | ||||||
| William G. Parrett | $ | 180,000 | $ | 149,535 | $ | 329,535 |
| (a) | The references to “stock” in this table refer to our deferred restricted common units. Amounts for 2017 represent the grant date fair value of stock awards granted in the year, computed in accordance with GAAP, pertaining to equity-based compensation. The assumptions used in determining the grant date fair value are set forth in Note 16. “Equity-Based Compensation” in the “Notes to Consolidated Financial Statements” in “Part II. Item 8. Financial Statements and Supplementary Data.” These deferred restricted common units vest, and the underlying Blackstone common units will be delivered, on the first anniversary of the date of the grant, subject to the outside director’s continued service on the board of directors of our general partner. The amount reported for Mr. Jenrette also includes the incremental fair value, computed in accordance with GAAP, with respect to the accelerated vesting of his 2017 deferred restricted common unit award (see footnote (e) below). |
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| (b) | Each of our non-employee directors was granted deferred restricted common units upon appointment as a director. In 2017, in connection with the anniversary of his or her initial grant, each of the following directors was granted deferred restricted common units: Mr. Mulroney — 4,546 units; Mr. Parrett — 4,611 units; Mr. Jenrette — 4,397 units; Mr. Light — 4,629 units; Ms. Lazarus — 4,567 units; Mr. Grauer — 4,811 units; and Mr. Breyer — 4,397 units. The amounts of our non-employee directors’ compensation were approved by the board of directors of our general partner upon the recommendation of our founder following his review of directors’ compensation paid by comparable companies. |
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The following table provides information regarding outstanding unvested equity awards made to our directors as of December 31, 2017:
| Stock Awards (1) | ||||||||
| Name | Number of Shares or Units of Stock That Have Not Vested | Market Value of Shares or Units of Stock That Have Not Vested (2) | ||||||
| James W. Breyer | 4,397 | $ | 140,792 | |||||
| Peter T. Grauer | 4,811 | $ | 154,048 | |||||
| Richard Jenrette | — | $ | — | |||||
| Rochelle B. Lazarus | 4,567 | $ | 146,235 | |||||
| Jay O. Light | 4,629 | $ | 148,221 | |||||
| The Right Honorable Brian Mulroney | 4,546 | $ | 145,563 | |||||
| William G. Parrett | 4,611 | $ | 147,644 |
| (1) | The references to “stock” or “shares” in this table refer to our deferred restricted common units. |
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| (2) | The dollar amounts shown in this column were calculated by multiplying the number of unvested deferred restricted common units held by the director by the closing market price of $32.02 per Blackstone common unit on December 29, 2017, the last trading day of 2017. |
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| (c) | Mr. Gray and Mr. Goodman are employees and no additional remuneration is paid to them for service as directors of our general partner. Mr. Gray’s and Mr. Goodman’s employee compensation is discussed in “— Item 13. Certain Relationships and Related Transactions, and Director Independence.” |
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| (d) | Mr. Grauer resigned from the board of directors of our general partner effective January 30, 2018. In connection with his departure and in recognition of his years of service to Blackstone, the board of directors of our general partner determined that it was appropriate to fully vest his 2018 deferred restricted common unit award granted on January 26, 2018. |
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| (e) | Mr. Jenrette’s retirement from the board of directors of our general partner was effective on October 17, 2017. In connection with his retirement and in recognition of his years of service to Blackstone, the board of directors of our general partner determined that it was appropriate to pay Mr. Jenrette his cash retainer for the remainder of the year and to fully vest his 2017 deferred restricted common unit award granted on July 14, 2017. The decision to vest his 2017 deferred restricted common unit award was accounted for as a modification for financial statement reporting purposes in accordance with GAAP and the amount reported in the “Stock Awards” column for 2017 for Mr. Jenrette includes the incremental fair value, computed as of the November 13, 2017 modification date in accordance with GAAP, with respect to the modified award. |
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