Carlyle chief executive steps down in surprise exit

Kewsong Lee joined Carlyle in 2013 and became chief executive in September 2020

The employment contract of Carlyle group chief executive Kewsong Lee was due to expire at the end of the year. Reuters
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Carlyle Group chief executive Kewsong Lee has stepped down, a setback to the private equity company’s bid to manage a generational transition during a period of market turbulence.

The sudden exit, announced late Sunday, reverses a changing of the guard set in motion only five years ago when Carlyle’s founders ceded leadership duties to a new pair of co-heads. That arrangement didn’t last.

Mr Lee, 56, became the sole boss in September 2020 after a power tussle that led to co-chief executive Glenn Youngkin leaving. Now, Mr Lee’s exit has come as a surprise to many executives too.

With his five-year employment agreement due to expire at the end of the year, Mr Lee and board directors clashed over his contract in recent discussions, according to a source.

Carlyle co-founder Bill Conway, who is current non-executive co-chairman, will step in as interim chief executive during the search for a successor, the company said.

At the start of 2022, Carlyle bumped Mr Lee’s base salary more than threefold to $1 million.

For all of the private equity industry’s attempts to tout its prowess at fixing and reshaping companies, many companies have struggled to navigate a smooth transfer of leadership and shake off the hallmarks of their founders.

Mr Lee had been trying to diversify revenue, make profits less tied to markets’ boom-and-bust cycles and lift Carlyle’s stock price.

That task is needed more than ever, with volatile markets making it harder to take companies public or sell them at high prices.

In his aggressive attempts to remake the business, Mr Lee — a former Warburg Pincus deal maker who joined Carlyle in 2013 — made changes that at times put him at odds with the old guard.

He tried to knit competing factions and restructure teams to make deal-makers work more closely together. He also staffed the top ranks with new faces and tried to shift the Washington-based company’s power centre towards New York.

Carlyle shares have dropped 31 per cent this year, underperforming rivals such as Blackstone and Apollo Global Management.

Carlyle posted a 34 per cent increase in distributable earnings in the second quarter, as it grew its credit business and boosted fee streams.

Still, Mr Lee said at the time that the industry faced an uncertain environment as the US Federal Reserve moves to raise interest rates and tackle inflation.

Valuations will need to reset before deal activity picks up across the industry, he said.

A new search committee will help to find a permanent successor, Carlyle said.

The company also formed a chief executive office to assist Mr Conway and make a “seamless transition” once a replacement has been identified.

Updated: August 08, 2022, 1:36 PM