Why Did Carlyle’s CEO Resign?
Carlyle Group shocked Wall Street when its chief executive Kewsong Lee abruptly resigned in August, throwing the leadership of one of the world’s largest private equity groups into disarray. Lee was negotiating a new five-year pay package worth $300mn in stock, the FT reported.
Talks on the contract broke down after the firm’s strong second-quarter results in July, leading to Lee’s surprise exit, which was announced by Carlyle on a Sunday evening. Ultimately, the issue was not pay, but instead control. Carlyle’s three billionaire co-founders, David Rubenstein, William Conway and Daniel D’Aniello had stepped aside in 2017, naming Lee and Glenn Youngkin as co-chief executives.
In 2020, Lee won a power battle that left him in charge but made him enemies internally, say insiders. Youngkin left to enter politics and is now the Governor of Virginia. Yet Carlyle’s three co-founders retained board seats and collectively controlled the company. They grew increasingly concerned about the pace of change inside the group.
Carlyle established its dominance in corporate buyouts in the 1990s and 2000s by forging political connections from offices in Washington, DC. It was once nicknamed “The Ex-Presidents’ Club” because it had counted George HW Bush and John Major as advisers, but it had been overtaken over the past decade by more aggressive New York rivals such as Blackstone.
From New York offices, Lee had been working to catch Carlyle up, expanding rapidly in credit, real estate and insurance-based investments. He hired new top executives and consolidated the group’s once unwieldy operations. Lee was looking for independence – in addition to a large potential windfall – in continuing to set Carlyle’s path. But he overplayed his hand. “He wanted complete autonomy,” said one person close to the situation. “The founders gave it to him. Then they took it away” Carlyle’s old guard is now back in power. Co-founder Conway has become interim chief executive as the firm searches for a new leader.