In the days leading up to his 57th birthday on Friday, Kewsong Lee was growing uneasy. The now-former Carlyle Group chief executive had, months earlier, proposed a $300mn pay package that would cement him as one of the most powerful figures in finance for the next half decade.
The Korean-American dealmaker was playing the role of Wall Street titan, while privately harbouring rising doubts. His bosses, Carlyle’s three septuagenarian billionaire founders, hadn’t responded to the nine-figure pay gambit; Lee felt his situation was becoming untenable, said close confidantes. He thought his days were numbered.
On Sunday, the trio — David Rubenstein, Bill Conway and Daniel D’Aniello — finally showed Lee the door, unwilling even to discuss his proposal. It threw one of the world’s largest private equity firms into disarray and wiped more than a billion dollars from its market value.
The chaotic exit revealed deep fissures within Carlyle, once nicknamed “the ex-president’s club” — the firm had for years operated as a revolving door between the world’s political and financial elites, previously counting George HW Bush and John Major as advisers.
But a firm that established its dominance by forging political connections in the clubby world of Washington, DC, three decades ago has been overtaken by more aggressive New York rivals such as Blackstone, KKR and Apollo — and seems unsure how to adapt.
In almost any other business, a $300mn pay request would seem both audacious and tone deaf when ordinary workers face hardship. But Lee’s was a share-based deal that would reward him if he could restore Carlyle to its former glory. And his rewards were far less than counterparts at rival firms.
Carlyle’s rejection was, in the end, about power rather than money. “He wanted complete autonomy,” said one person close to the situation. “The founders gave it to him. Then, they took it away.”
The young Lee grew up in Schenectady, New York, an industrial city three hours north of Manhattan where his father taught economics at a state university. His parents taught him the piano from the age of four; he later took up the violin.
As a teenager, he won a scholarship at Choate Rosemary Hall, the elite Connecticut boarding school where John F Kennedy studied. At Harvard he met Zita Ezpeleta, his wife of three decades, with whom he has two children.
In his twenties, Lee joined private equity firm Warburg Pincus, considered by many the genteel elder statesman of the cut-throat buyout industry, where he led on many lucrative deals.
He made “one big mistake”, says a former colleague. He was the key figure behind Warburg Pincus’s costly 2007 decision to invest in MBIA, an insurer hit hard by the subprime mortgage crisis.
By 2013, Lee had not been given an executive role at Warburg. Conway, the architect of Carlyle’s private equity business, recruited him as a top lieutenant. It was a pivotal moment. Carlyle had listed on public markets and needed to grow quickly.
On the outside, the firm maintained an aura of power, reinforced by its proximity to Washington — its headquarters are a short walk from the White House and Rubenstein had close ties to the Obama administration. Carlyle had bought stakes in defence and aerospace companies during the Bush years, cast as villains in film-maker Michael Moore’s Fahrenheit 9/11.
But internally, it became chaotic. The founders, billionaires after Carlyle’s 2012 listing, pulled in different directions and the firm made bad acquisitions and launched niche products that struggled to break even.
By 2017, Carlyle’s stock had slumped below its listing price. Its founders stepped sideways into philanthropy. Lee and Glenn Youngkin, a popular 20-year veteran, were named co-chief executives.
Lee seized the opportunity, taking charge of Carlyle’s buyouts and credit investments, while Youngkin looked after lesser operations. “He made a brilliant strategic decision on day one,” said a contemporary.
But consolidating his power made Lee enemies. “He was constantly working to become CEO and then oust Youngkin,” another former colleague says. “He wanted to know if you were on board with that programme.”
Still, he prevailed, becoming sole chief executive when Youngkin — now Republican governor of Virginia — left in 2020. But Lee still had a difficult task, navigating at times the conflicting wishes of co-founders who had not fully walked away. “On strategic stuff they were a two-headed monster,” a former adviser said.
Lee was managing Carlyle’s dual identity too. The firm splits its headquarters between Washington, its historic power centre, and New York, epicentre of finance. This geographical and symbolic gap widened during the pandemic. From New York, Lee had some success merging subscale businesses and hired new leaders, while pushing Carlyle into credit, real estate and insurance investments — he sought to replicate much of what turned Blackstone into a behemoth.
Ultimately, his failed pay gambit revealed that the old guard in Washington was not on his side. To one insider, it highlights the company’s identity crisis: “The centre of gravity of the firm has migrated north, but not necessarily the centre of power.”