Business Context and Reporting Period
This Form 8-K Current Report was filed by The Blackstone Group L.P. on June 9, 2008. The filing discloses a significant executive appointment and the associated compensatory arrangements.
Key Financial Metrics
The filing does not report operational financial metrics such as revenue, profit, cash flow, margins, debt, or liquidity. The financial data provided is limited to the specific compensation terms for the new Chief Financial Officer:
- Base Salary/Draw: $350,000 annually (aligned with other Senior Managing Directors).
- Guaranteed Minimum Cash Compensation (2008): $3,500,000, contingent on employment status or termination without cause.
- Equity Sign-on Grant: 155,764 Blackstone Holdings partnership units (Deferred Units).
- Equity Make-Whole Grant: 338,381 Blackstone Holdings partnership units (Deferred Units) to offset forfeited Merrill Lynch compensation.
- Equity Bonus Grant (2008): Units valued at $4,500,000 based on the 30-day volume weighted average trading price.
- Long-Term Incentives: 0.215% of net management fee income and 0.2% of profit sharing in carried interest vehicles closing after January 1, 2009.
Material Changes
The primary material change is the appointment of Laurence A. Tosi as Chief Financial Officer of Blackstone Group Management L.L.C., effective as soon as possible consistent with his prior commitments (expected September 2008). Michael A. Puglisi, the current CFO, will remain a Senior Managing Director and member of senior management.
Outlook, Risks, and Unusual Items
Management Commentary: Mr. Tosi brings extensive experience from Merrill Lynch & Co., Inc., where he served as Chief Operating Officer for Global Markets and Investment Banking and previously as Senior Vice President and Finance Director.
Compensation Structure Risks: The equity awards are subject to vesting schedules (ranging from four to five years) and forfeiture terms. Unvested awards terminate if Mr. Tosi ceases to be a Senior Managing Director, except in cases of termination without cause, death, permanent disability, or a change in control, which trigger full vesting.
Restrictions: Mr. Tosi has executed a non-competition and non-solicitation agreement consistent with other Senior Managing Directors.
Investor Verification Checklist
- Verify the exact commencement date of Mr. Tosi's service, currently expected to be September 2008.
- Confirm the valuation of the $4,500,000 equity bonus grant based on the 30-day volume weighted average trading price at the time of grant.
- Review the specific vesting schedules and forfeiture conditions detailed in the agreement filed as Exhibit 10.28.
- Monitor the transition of duties between Mr. Tosi and Mr. Puglisi.