So did Steve Schwarzman make $5 billion last year or $351 million? Actually, it was closer to $1 billion

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Yesterday afternoon the news was that Blackstone’s Steve Schwarzman got $5 billion in compensation last year. But now AP is running the following correction:

In an earlier version of this story, the Associated Press erroneously reported that Blackstone co-founder Stephen Schwarzman’s total compensation for 2007 was $5.13 billion. Schwarzman’s compensation for 2007 was $350.7 million. In addition, he received $4.77 billion in stock — representing his stake in the company — in Blackstone’s IPO in June.

That piqued my interest, so I started poking around Blackstone’s 10-K. The compensation disclosure contained therein is extremely, perhaps deliberately, confusing. (Plus I’m not really clear why it’s in the 10-K instead of a proxy statement, but that’s another matter.) But here’s the deal. Schwarzman actually got stock valued at $7.2 billion in Blackstone’s IPO in June, in exchange for his existing “interests in the entities comprising our business.” The $4.77 billion was just the portion subject to a four-year vesting period–presumably intended to keep Schwarzman from retiring prematurely to one of his five oversized dwellings. (“I love houses,” he told James Stewart of the New Yorker).

That stock is worth a bit less now–$3.7 billion as of this morning–so any account of Schwarzman’s pay in 2007 probably ought to at least mention that immense paper loss. But it also ought to mention the $684 million of cash that Schwarzman took out of the IPO. That’s not disclosed under compensation in the 10-K; it’s down below, under the label “Transactions with Related Persons.”

The AP’s new $350.7 million figure represents the cash distributions that Blackstone says Schwarzman got in 2007, mostly carried interest on various Blackstone partnerships. Add the $684 million to that and you get $1.035 billion cash. Which is about $1.035 billion more than I made last year.

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