Chief Executive Officer Kewsong Lee stepped down as a setback to the private equity giant's bid to navigate a generational transition during a period of market turbulence.
His sudden exit, announced later Sunday, reverses a change of guard set in motion just five years ago when Carlyle's founders ceded leadership duties to a new pair of co-heads. That arrangement didn't last.
In September 2020, Lee, 56, became the sole boss after a power tussle that led to co-chief executive Glenn Youngkin leaving. Lee's exit was a surprise for many executives. Lee and board directors clashed over his contract in recent discussions, a person familiar with the matter said, with his five-year employment agreement due to expire at the end of the year.
Co-Founder Bill Conway, current non-executive co-chairman, will step in as interim CEO during the search for a successor, the company said in a statement.
Carlyle bumped Lee's base salary more than threefold to $1 million at the beginning of 2022.
Many firms have struggled to navigate a smooth transfer of leadership and shake off the hallmarks of their founders for all of the private equity industry s attempts to praise its prowess at fixing and reshaping companies.
Lee wanted to diversify revenues, make profits less tied to markets boom and bust cycles and lift Carlyle's stock price. Lee, a former Warburg Pincus dealmaker who joined Carlyle in 2013, made changes that put him at odds with the old guard in his aggressive attempts to remake the firm. He tried to knit competing factions and restructure teams to make dealmakers work more closely together. He also staffed the top ranks with new faces and tried to shift the Washington-based firm's power center toward New York.
The shares of Carlyle have dropped 31% this year, underperforming rivals like Blackstone Inc. and Apollo Global Management Inc.
In the second quarter, Carlyle posted a 34% increase in distributable earnings, as it grew its credit business and boosted fee streams. Lee said at the time that the industry is facing an uncertain environment as the Federal Reserve moves to raise interest rates and tackle inflation. Valuations need to reset before deal activity picks up, he said.
Carlyle said a search committee will help find a permanent successor. The CEO office was formed to assist Conway in making a seamless transition once a replacement was identified.
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